It’s been almost three years since I wrote my first blog post for the New York Times. While I’ve touched on my own experience with selling my business, I have yet to write a blog post dedicated to my primary reasons for selling and what led up to the decision.
Regardless of the size of the business, its age – or that of its owner – the industry or geographic location, most of us end up reaching our limit as business owners in much the same way. Here are three reasons why I decided to sell my business back in 2006.
1. The Industry
For many would-be business owners, the food service industry has romantic appeal. It’s not just about the food; it’s about serving up an authentic experience. Whether it’s an Irish pub, a vegetarian cafe, or a French creperie, everyone who starts a food service business is on a mission to bring something truly special to the local community.
Chris and I started Caffinity – a drive-thru coffee and espresso business based on thousands like it in the Pacific Northwest – with a clear business model, extensive research and impeccable training. The latter came from our roaster, Caffee D’arte. Our startup didn’t just have romance – it had Italian romance. We would be bringing an authentic espresso experience from our native Seattle to Northwest Arkansas, a place previously fueled by bitter dregs served in Styrofoam convenience-store cups. Morning commuters would sing our praises, and herald us as the best part of their day. And indeed, many Caffinity customers did.
After a year and a half of working sixteen-hour days, six days a week however, we realized the following: Food service is less like romance and more like marriage. It’s easy to fall in love and get swept away with the idea of it, but what’s required to be successful is an almost unfathomable amount of dedication and hard work. While the quality of your product is important, running a food service establishment is really about your ability to constantly manage two groups of disparate people: customers and employees.
2. The Employees
First, let me be clear that there were a handful of employees who made Caffinity the success that it was. Thanks to them we won “Best Coffee” in the local newspaper’s Readers Choice Awards every year that we owned the business. Emily, Tiffany, Alex, Tawny, Anna, and Brock – they kept the customers coming back and pulled shots as good as any barista in Seattle.
With that said, there were many more employees who tried to rob us blind, didn’t care about a quality product and great customer service, or simply didn’t show up for work one day. Such is the nature of food service (see number one, above.) It’s not so much the employees themselves as how managing a certain type – in our case over a dozen girls with an average age of 20 – ends up affecting your life.
There are countless stories of the phone ringing at 4:00 AM, Chris rushing to get dressed, run out the door and arrive at one of our stores in time to open for the morning rush. The most memorable was the morning our first son was born. About an hour after the birth Chris got a call on his cell phone from one of our regular customers, wondering why our flagship North Walton location wasn’t open. We also missed a family wedding in Boston thanks to baristas behaving badly.
3. The Burnout
Plenty of business owners decide to sell a business based solely on burnout. Having been there myself, I begrudge them nothing. There comes a point when you’re done, whether it’s three years or thirty years after starting the business. The real issue is what the burnout leads you to do – or not do – as a business owner.
In the case of Caffinity we reached burnout not long after opening our second location. We knew that the business would achieve a new level of profitability – optimal for hiring a full-time operations manager – with a third location up and running. We used our personal savings to open the first location, and got a small loan to open the second. We were unwilling to take on any additional debt to open a third location, not to mention the added physical fatigue that we knew would come from opening another store.
When you feel yourself become unwilling to make what you know are the right decisions for the growth of your business based on personal or emotional reasons, take it as a sign that it may be time to get out.
More than anything else, selling our business allowed Chris and I some breathing room. The net proceeds from our sale represented about two years of corporate salary, a 10X return on our initial investment, and a chance to regroup and start another business. Considering our successful sale and the countless lessons learned it was three and a half years well spent.
What are your thoughts? What are some signs that it’s time to sell your business?