A business transaction starts with the seller's will and the steps taken to initiate the change of ownership. During the change of ownership process, the seller-entrepreneur faces two particular critical moments for success.
The first phase could be described as a "awakening ". It is easier to give a wake-up call when the seller has "figured out" what he or she can do after the sale of the business.
At this stage, it is also necessary to check the state of the business. There are tools to test this, such as the Growth Capability and Digital Readiness Test on MicroENTRE's Kasvavayritys.fi website (https://kasvavayritys.fi/).
For entrepreneurs, entrepreneurship is often a way of life and part of their identity, which is a lot of work to give up. But does entrepreneurship have to be abandoned altogether, or could it be more of an attitude than a way of life? An entrepreneur's attitude does not have to be abandoned when leaving the business, but the same strengths can be applied to other aspects of life. The work of a lifetime does not end with a change of ownership, as the business continues to live and evolve under a new entrepreneur. The period after the change of ownership can be described as a "continuum".
To clear their minds, entrepreneurs - or anyone contemplating a life change - can, for example, write themselves a letter to the future. In the letter, you can say things like where you see yourself in five years' time, what your daily life will look like, where you live, what things have gone well and what you have achieved. You can also write down your thoughts and ideas about the things you dream about.
Based on the research, we know that entrepreneurs often experience uncertainty during a change of ownership and that it can feel difficult to make a decision. We all have a human tendency to delay difficult decisions. Procrastination can be influenced, for example, by uncertainty about how to handle the actual sale transaction, "and I don't really even have time to find out about this sort of thing and what everyone thinks about it". In this situation, many entrepreneurs opt for the so-called silent sales. It is difficult to sell a business if you don't tell anyone about it. By doing so, the entrepreneur unwittingly almost ensures that a potential buyer will not find the business.
A viable and profitable business should not be run down because the entrepreneur decides to quit. Going out of business should not be seen as a purely negative thing. It says that the business is so good that someone wants to buy it. Research shows that a change of ownership is an opportunity. With open interaction, a buyer can be found surprisingly close to you, for example among employees, competitors or customers. In many cases, it is the interaction that triggers a change of ownership. The important thing is to get involved before the business fizzles out.
Business transfer requires the entrepreneur to learn new, and sometimes difficult, things. Whether to sell the company's stock or the business, how to value the business, what is the selling price and what factors influence it? Guidance is available to answer these questions. For all questions relating to the change of ownership of a business, it is worth seeking answers from regional and organisational advice services on changing ownership.
Authors:
Laura Veikkola, Project Researcher, KM exp 6/2022
Kai Hänninen, VALO Project Manager, University Researcher, Dos., TkT, DI, eMBA
More information:
VALO project
OVI project
In Kerttu Saalasti Institute's blog we write about the topics of the Institute's research groups, micro entrepreneurship education and the Institute's general topics. The authors are researchers, experts and members of networks.
Our topics are: micro entrenepreneurship, future manufacturing technologies, regional excellence, micro entrepreneurship education