Part 2 - Should I Sell My Business?

Have you ever wondered what it takes to sell a seven-figure business? Join us, Raya and Trae, as we pull back the curtain on our own journey, revealing the challenges and complexities we encountered. From an unexpected landlord dispute that threatened to upend our operation to the emotional rollercoaster of transitioning ownership, we lay it all bare. We share the critical lessons we learned, especially the importance of having the right clauses in contracts and choosing a buyer who values your team as much as you do.

This journey wasn't just about the legal battles and business negotiations. It was a deeply personal experience that reshaped our identities and pushed us to our emotional limits. We explore the mental and emotional impacts of selling a business, from anxiety and stress to relief and newfound freedom. On the other side of the ordeal, we found the time and energy to grow our online venture and this podcast. We also discuss how we faced the realities of investing in an app, and the security of having a financial buffer.

Our story isn't just one of struggle but also of resilience and determination. We closed this chapter of our lives with a single, transparent meeting where we announced the sale to our team. We believe in fostering an environment where everyone can express their feelings and understand the new dynamics. As entrepreneurs, it's important to always keep your big vision alive. Our experiences, insights, and practical advice will empower those contemplating a similar path. Buckle up for a raw, insightful, and enriching conversation.

Transcript

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Challenges in Selling a Business

Raya 0:02

I'm Raya .

Trae 0:03

And I'm Trae .

Raya 0:04

We'll share our own experience building and selling a seven figure business , owning multiple successful brands , and share the stories of other entrepreneurs who are incredibly successful in business .

Trae 0:16

This is Billion Dollar Vision , the podcast where we educate current and future entrepreneurs to expand your vision , give you strategy and help you take your business far beyond what you thought was even possible .

Raya 0:28

Your future is limitless and it begins right here , right now .

Trae 0:35

Let's go Now . We're going to go into the challenges , and there were , there were many hurdles and I'm assuming we're going to , we're going to talk about this so you can be ahead of the game and you can be set up properly , so you do not have these issues . I'm sure there are other issues that could come about when you're selling a business , but this made our timeline much longer .

Trae 1:03

It went from wanting to sell in January and February with a buyer that was ready to buy with a buyer that was ready to buy in place and a buyer that's stuck in there and stayed the course and never gave up thankfully right , because most buyers would not have probably done this , but it moved it from January , february all the way to what we thought was going to be then , to May , then June mid July and then mid July finally , so it extended it out . So let's start off with the challenge of the landlord issue .

Raya 1:41

Yeah , which was , honestly , the biggest challenge that we had to face . So this was like the end of October , right Of 2022 , when we decided to list the business . It was like almost the end of October . We had just renewed the lease for three years , for another three years , with the first option to renew , which I learned from the past is very important to have that clause in any of your contracts that you sign . That means , when your renewal comes up , you have the first right to say hey , I do want to renew or I don't , not .

Raya 2:15

The landlord that's why I got kicked out of my first storefront was I didn't have that clause in , and so I had signed the lease to renew back in the end of August , right , Thinking everything's fine . So I was out to lunch with I was out to lunch with Kirsten because she had just , like you know , was leaving and we did like a final , like lunch together . And I check my messages after I leave and I have a message from the real estate agent of where we were renting from and she goes Rea , it's an emergency , I need you to call me back . And I was like thinking , okay , like am I getting kicked out again ? And yep , basically she goes the landlord never signed the renewal . You signed , but he didn't . And I just want to give you a heads up that he is sending a certain this is a Thursday , by the way he's sending a certified letter on Friday . It's going to get to you on Monday , which was October 31st , I remember , because this is Halloween . It's going to get to you on Monday and on Monday you'll have to be out of the business .

Raya 3:30

First of all . Not only did we just list the business for sale , but now I'm thinking , holy Jesus , like we're about to lose everything in a couple of days , like our team . And this also let me backtrack . It was very important to us to find a buyer that wouldn't fire the team . Right , we wanted to keep everyone's jobs , and so that was very important to us . So when I heard that you know we might be kicked out by Monday , I'm thinking you know , not even in terms of just like us , but we have 10 people on our team at the time . What are they supposed to do ? And so , for the last , for the previous nine years , we had an incredible landlord , you know no problems , but he ended up selling the building and he sold it to the town like billionaire and the town billionaire isn't going to be like the billionaires we're going to be . We're going to be nice , good billionaires , but he's just like he's a business man , right .

Trae 4:35

But let's , let's go back .

Raya 4:36

He has no emotion to it .

Trae 4:39

Aside from that , there's a learning lesson in this right in the contract . Okay , in the contract it states that the renewal you have to send written notice that you're gonna renew six months before the end of the contract right .

Raya 5:01

Which I had no idea , because I never had to do that previously .

Trae 5:06

in the same renewal , the previous owners , the previous owners , they didn't go about that , it was just a phone call hey , you're gonna stay , okay . Yeah , you're gonna stay , all right , cool , we'll send over another contract , et cetera . This guy and I'm sure typically he may operate that way , but he had a vision . He owned this location . The business that we're referring to is in like a strip right , so there's probably a row of like seven businesses , and so he had a vision in his mind of- .

Raya 5:35

Kicking every business out .

Trae 5:36

Kicking every business out because he was buying up real estate all on that street and he had a vision for it . He's playing Monopoly , so to speak , right , so he was buying up different things on the street , and so I just wanna make sure we stay factual with it . So there was a misstep .

Raya 5:51

Yeah .

Trae 5:51

There was a misstep so it was not sent in , but there was a phone call , okay .

Raya 5:55

By the property manager .

Trae 5:56

There was a phone call and it was like , yeah , you're gonna stay right . And so , and even what happened was the after that the expiration date to renew happened . There was written emails and there was a phone call from the property management company who was actually calling in and saying , hey , are you gonna do it ? Okay ? Well , yeah , I'll just get the paperwork over to you and you'll sign it . This is all after the fact . Now the property management company is acting on behalf of the landlord , right ? So we were fortunate enough to get the situation worked out , had to get an attorney .

Raya 6:32

Well , let's talk about that though . So , because it is not easy to go up against a billionaire , like because one , this man is very well known in Tampa we called three different lawyers , including my own lawyer , who is great , he's amazing , but he's part of this guy's country club and he didn't wanna get kicked out , right ? I'm gonna talk about the phone call .

Trae 6:59

So we're on the phone call with him and he's talking and he's saying what's the situation ? And we're telling him the situation and then , as I'm listening to him the whole time he's talking , he says well , you guys are gonna have to get an attorney who's gonna have to write something up that says this .

Raya 7:15

We're like , you're our attorney .

Trae 7:17

And I stopped him . I said I'm not gonna say his name , but I said , hey , man , you keep saying you guys are gonna have to get an attorney . This is why we called you .

Raya 7:26

You're our attorney .

Trae 7:28

You know we need you to do this . And he said , oh man , I'm gonna have to talk to my wife about this . And we were like what do you mean ? He said we're members of the country club and that he owns that this guy owns and my wife loves to go have dinner over there and I just this is a sensitive situation . And yeah , it was pretty funny .

Raya 7:52

And we talked to three lawyers .

Trae 7:54

We talked to another one who said the situation .

Raya 7:56

Well , no , she wasn't part of the club , but she said it's gonna be tough . She said it's gonna be so hard because he could play so many games with you . It would literally bankrupt you , like he could play games in court . He could play games that would just rock up your attorney fee so much that is it worth it ? But to me it was worth it .

Trae 8:15

That's all I'm about to say .

Raya 8:17

To me it was like him stealing seven figures from us . It was like he was stealing my family's future .

Trae 8:27

And not just from that standpoint . It was worth it also because the alternative was we could have just tucked our tails and said you know what ? All right .

Raya 8:35

Call it a loss . Call it a loss , we were over it .

Trae 8:38

But it and shut down the business . Yeah , we know we would have been found because we have an online business . We already had a backup plan . We already had something else that was running smooth , but the employees would have been out of jobs , right , and it would have been so heartbreaking for them that that just wasn't an option . So we had to find an attorney who was gonna figure out a way for us to be able to stay .

Raya 8:59

Yeah , so it costs . So we found one that was like he , was like this mother effer .

Trae 9:06

We found one , luckily , that did not like the guy .

Raya 9:08

He didn't like him .

Trae 9:09

Wasn't a part of the country club ? Yeah , and wanted to go up against him .

Raya 9:13

So it costs us $10,000 to send a certified letter back . Basically , what is it called ? Where they like , file a motion to like a judgment .

Trae 9:23

It was supposed to be like an injunction .

Raya 9:25

Oh , okay . So basically we filed a lawsuit against the landlord and it cost us $10,000 .

Trae 9:29

It wasn't a lawsuit . It was not Okay . It was because it was not a lawsuit .

Raya 9:34

It wasn't .

Trae 9:36

The attorney sent a written notice , but before he actually sent them something to the court , he sent a written notice to the landlord's attorney . I think it was an injunction right , Something that he was gonna file with the court if they proceeded forward with shutting down the business . So he sent a letter over to them . Luckily , he got a response back and they began to negotiate . With that being said , the negotiation ended up being they honored the three more years . They honored the three years but did not give the first right to renew .

Raya 10:12

Yep . So with that , this is what really complicated the whole sale of the business . Anytime a buyer is going through the SBA or the bank because they're giving them a 10-year loan , they are asking for a 10-year lease in a brick and mortar location to show that you're gonna be there for 10 years right To pay this loan back . And so I mean we begged and pleaded to negotiate with the landlord even for just on paper to say that we'd have the 10 years . But he didn't really have to because the buyers were okay with moving . I mean , they were honestly amazing the fact that they stuck in as long as they did .

Raya 10:53

They jumped through hoops to buy this business because they actually had to end up finding a whole brand new location signed for that location . So now they have two locations at the same time . One's being built out and once that's done they'll move into that . But that's what ended up making this from a January February sale all the way to July is that they actually had to find a new location to get that 10 years . And it was actually a buyer that moved from out of state , so she really did jump through hoops to buy it .

Trae 11:28

She did , yeah , she stuck in there and heeded it to her partner . They stuck in there and luckily they both understood business enough and they understood that if they could get past these things , that things would work out in their favor . So we were very , very , very lucky and blessed to have found them as buyers . On the challenge standpoint , one of the other challenges was that we faced was because it drug out so long in the industry that we were in . It affected the business . Right , yeah , it affected the business because we were just trying to maintain .

Trae 12:14

Yeah , it's also so we were trying to maintain . But also it was a situation where we had packages in the business . Right , we offered packages and the agreement was that , because we were trying to be fair to the buyer , they would have to honor any packages .

Raya 12:33

Well , if they had to honor any package , we weren't trying to like sell a bunch of packages before we sell because you know it's like we don't want to pay that back . If we were , it was because you know we sold it and then we didn't want them to have to honor something that they're not getting paid for .

Trae 12:49

So because we stopped selling packages , really like we were hoping , January , February , and then each month that went on it was like the next month , the next month , that we're saying it's gonna be the next month or the next month or the next month . So it slowed down A little bit . It slowed down the month we still maintain pretty well though .

Raya 13:06

Still like for not running ads or not doing much . I mean we were maintaining 100K months you know , without you know , doing much to grow , which was pretty amazing for us like that . You know seven month timeframe .

Trae 13:22

Yeah , but it definitely affected it .

Raya 13:24

But then our numbers look a little different .

Trae 13:26

That's what I'm saying .

Raya 13:27

Yeah , now the SBA asked us to resubmit paperwork because it had been so long , and now we have all of 2022 . Exactly , and so it did affect it a little bit , you're right .

Trae 13:37

So SBA asked to submit in what December ? Then , as it stretched on , it may have said resubmit in March . And then we thought it was going to be March and they said resubmit in May .

Raya 13:49

There's a lot Then it got to May .

Trae 13:51

So every time it was a resubmission they would see a decline . But the decline was because and they understood we had slowed down ads , we had slowed down selling packages , we had slowed down so many things that it affected

Selling a Business

Trae 14:03

the numbers .

Raya 14:03

And then we also lost a couple employees during that time . One just never came back from maternity leave , and then the second one decided to move out of state . And so at the same time we didn't want to , we weren't looking to rehire because we thought at any day this could sell right , like it kept getting pushed back . But we kept getting dates that were like why would we hire ? We don't know if what she her plan is and what she wants to do , so why hiring and train a new microblading artist when that could take months in itself ? And so that was definitely part of the challenge , yep .

Trae 14:38

So if you're listening , you may be wondering well , if an employee leaves , well , can't you just rehire someone else ? It affects the numbers , because each service was responsible for X amount of dollars , right , and so when an employee decides not to come back , then we have to tell the SBA . Well , oh well , this is why this service is down this month or four , because this person didn't come back , right , and we didn't rehire any . We didn't fill the position because , once again , every month we're thinking the next month is supposed to sell .

Raya 15:10

Or in the next two weeks .

Trae 15:11

Or the next two . That's it . Yeah , every . It kept going on and on and on . It was great , and so we were trying to do what was best for the buyer by not putting someone in that room and giving them the chance to buy a business with open rooms where they could fill Because they have their own vision .

Trae 15:25

Yeah , they got their own vision . So it was a process right , it was a really big process , and now we will go into the benefits and how it changed our lives going forward , and how selling a business can actually change your lives too . So I'll let you start that .

Raya 15:47

Yeah , I think the biggest benefit is it is a change of identity to me , and maybe it's not the biggest benefit , but the biggest change to me is it's a change in identity , of letting go of the good to go after something greater , and with that it feels like . It feels like growth , it feels like I'm ready to grow , I'm ready for the next level , I'm ready for the next thing , we're ready together for the next thing , and it's kind of like the closing of a chapter and that had a lot of lessons , a lot of amazing . That was an incredible 10 years and to even make it 10 years , most businesses don't , and so the biggest benefit is freeing up of time , energy mostly for me , mental energy , because I didn't necessarily physically have to be there at the end , but it was the mental energy . And this person's leaving or this person has this problem , or there's a team and people is always going to be the hardest part of business , but also the most beneficial part of business .

Raya 16:53

But for where we're at , trying to grow another business , it was becoming a distraction , and so to be able to go all in on our online business and make things better for our students and our graduates and start building this out to be more of a . I mean , it is a real business and this is why I don't want anyone to get offended when I say real business , because we have a seven figure business . And I still say real business because I think it's like , once you grow your team out now it's like truly functional business and so that's what we started doing and we have more time to do a podcast and YouTube and investments and just things that we're excited about .

Selling a Business and Transitioning Ownership

Trae 17:40

Yeah , I'll tell you from my perspective , from having to actually go in and deal with the issues , having to deal with more on the hiring side the last year , going in , having to meet with employees who are not performing or doing the job correctly fire , I believe . What in the past year had to fire what ? At least two people and then another person that actually started their own business so we had to replace them . So it wasn't a fire , but it was so . It was so freeing mentally and freeing even from a spiritual standpoint , because when you have to deal with so many different personalities , so many different people's energy , it can become overwhelming at times . Especially when you have one business where you don't have to do that and then another business where you do , the other one where you don't it just feels a lot better In selling the brick and mortar business . It's been like a new lease on life , almost . I'm being serious , I never acted this way I said this before just because it just did what had to be done .

Trae 19:08

It's been great not having to deal , because there's always going to be something , no matter what business you're in . Anytime you have people eight , nine people . Even when you have the less amount of people , the less issues . But anytime you have that many personalities , it's in that many people who ultimately have the desire to be valued and want attention and all these different things which we all want , but it just creates issues sometimes . Fast forward now we have , like she said , we're building this business out . We have the time too , but we don't have to rush it because our profit margins are where they need to be . Our vision is clear cut . We know what we want to do with our vision , but we don't have to rush and add so many people . I think there's one benefit we know the issues that come with having a bunch of people . We're doing more contractors now than before . It's going to grow at the pace that we want it to and not at the pace where it's unmanageable or where it feels too stressful .

Raya 20:32

Yeah , Then benefits from the actual sale . I would say one of them are big investment-wise . We talked about this , but we invested in an app that we think Chris Harder will take to sell for a billion dollars one day . Whether we get to that point or not in the investment , but we definitely believe in it . For us , we're looking to invest in businesses that are building to sell , just like we want to build a business to sell . That won't be bosses in beauty It'll be another business that we're starting , but it's been a nice cushion . Now we're in London celebrating my birthday and the sale of the business . We had a lot of work to do after the sale , but we're finally taking some time to recharge .

Trae 21:32

Yeah , it's also nice to have the cushion , so we're not stressing we have enough money in the bank account for the mortgage for the next X amount of years . We have money for investments , we have money for travel . It's been very , very , very beneficial from that standpoint . Do you want to go into ? I know we didn't plan on talking about this , but in this scenario they didn't require the owner to stay on for X amount of time six months or a year or three years . Sometimes buyers can negotiate that , in that the owner has to stay on and they get paid a salary . In this situation , they didn't but do touch on post-sale how things were structured .

Raya 22:29

I thought that transition was fairly easy . I was willing to train as much as possibly needed , but training was quick . We met and sat down and went over things on a Sunday .

Raya 22:45

We met with the team on Tuesday and they really just took over . Also , the transition was just all the accounts and ordering and all the things that needed to be transferred , the auto pays that needed to be transferred and the new owner's name . That took the most time . From a training standpoint , it didn't take a ton of time . It was maybe an in total , a two-week transfer period of everything , but that's not always the case . The part of that was her partner is a businessman and very entrepreneurial and they have their own vision together . They were just wanting to get in there and do their own thing . Like I said , that's not always the case . I think a lot of times they want the previous owner to either stay on longer or do way more in-depth training . I really think it was a buyer situation .

Trae 23:40

Some bit of advice In terms . I'm sure some people are like well , how do you tell your team ? When do you tell your team ? Obviously , you tell them after the deal is done and , from what we learned , it's probably best to have one team meeting , bring in the new buyers at the same time and let them , you tell them what's happening , you introduce them to the new buyer and then let the new buyer take over from there and let the transition take place all the ones , versus having two separate meetings . So everyone can get that emotion out , because it's an emotional thing , right , and I don't want to gloss over that or act like it's not . It's an emotional thing for the employees because they had no idea , they had no idea .

Trae 24:31

They're shocked . They were hired by someone . Some of them were hired by did the hiring process with me . So it was a situation where it was very , very , very emotional , because now they're having to work for people that they have never met . Number one , number two they didn't agree to work for them per se , right .

Raya 24:54

But it's everyone's choice . Yes , it is you can't sell the people , you can only sell the business Correct . So it's our job of finding buyers . That we're not going to fire everyone right away . Right , they were going to say , hey , we're not going to fire people , we're going to see how it goes . It's their choice if they want to stay and their choice if they want to have good attitudes going forward .

Trae 25:16

Which was very good , because , had these buyers said , you know what , we're actually going to have a clean slate as soon as we get in , within the first two weeks of getting rid of everybody we probably would not have gone with them , because that's not what we weren't trying to put people out of jobs .

Trae 25:32

Now , from an employee standpoint , if there are any future entrepreneurs listening to this , if you're a current employee and you're in a situation where your owner could sell the business , think about it from this perspective . They're only doing what they feel is best for their lives , right ? You don't know what stresses they may have that the business could be causing them . It could be causing them health issues . So , when they sell the business , be happy for them , especially if you want to be an entrepreneur one day . Be happy for them because you could be in that same position one day . It is a very good feeling to be in the position to be able to sell your business , right ? So , as an employee , although it could be tough to see the owner of the business sell , you also have to understand their disposition and understand that if you want to be an entrepreneur one day , you've got to have the right mindset in that moment .

Raya 26:30

Yeah , and respect the new owners .

Trae 26:33

Have respect for the new owners , who aren't coming in to fire you , because sometimes we were lucky that they didn't want to do that . Some people may hit . Like she said , it's a choice , right , you can either choose to stay or you can choose to go . But you have to be appreciative . When people want to see you around , they want to pay you . Right , these owners are actually paying you money . So I just want to make sure we touch on that part , because it's very , very , very , very , very important .

Trae 27:03

As an entrepreneur especially a future entrepreneur who could have a job right now and you could be in this exact situation you can't have it both ways . You can't be disgruntled about your owners selling a business but then one day want to be an entrepreneur who sells a business , all right . So have the right mindset . If you're taking notes , make sure you write that down . Have the right mindset . And if you are the owner of the business , just make sure .

Selling in One Step

Trae 27:32

If you want to sell one day , do not , in my opinion , do not do it in two separate steps . Have one meeting where you let the team know what you're doing . You bring in the owners during that same meeting , introduce them and let everyone get that emotion out good , bad or indifferent , right there on the spot . Anything else , no , it's good , all right . So that is it for this episode and we will see you on the next one . Bye , bye .

Raya 28:13

Remember it all starts with your big vision .

Trae 28:17

Stay determined and always keep your billion dollar vision alive . Please , wherever you are listening , subscribe and leave us a five star review .

Raya 28:25

It would mean the world to us . See you next time .