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Last Update: Wednesday October 18, 2017

Key Idea: Sell If You'd Rather Play Golf

Jim Schell says that if you find reasons not to go to the office then it's time for you to sell.  Also, there are these episodes with Jim:  On selling the businessOpportunity Knocks and Staying Power.

Key Question:

A: 

Sell when you would rather do something else than go to the office.  This is what Jim said and he isn't kidding.   Jim remembered the feeling he had when he was growing his company. He told us that in the beginning he couldn't wait to get to the office.

But when the business had grown to over 200 employees, he noticed he didn't want to rush to work anymore.

Q: Do you think Jim showed courage when he faced his feelings?

A: Yes! Most of us want to hold on. We get comfortable and stop imagining the future being different from the present. We like being at the top of the organization chart because we get to call the shots. If we give that up, what will we do with our time?

Q: Are there ways to deal with burnout without selling the company?

A:  Sure. We see it all the time. Arnold Joseff and George Hill have over 200 employees at their company, Diversified Chemicals. They have re-organized the business so that each division has a president and the goal is to grow their replacements. Today they are trying not to make day-to-day decisions about each business thereby teaching the new leadership how to be in charge.

Ken Done, painter and founder of Done, felt the burn-out approaching when a customer asked for products Ken didn't want to make. This same strategy is used by Renegade Animation. They simply say, "No" to work they don't want to do. This restricts growth and keeps the business is the sweet spot where the founders are happiest.

Q: Why did Jim sell his first company and what do you think he learned from that experience?

A: The first company Jim started and sold was in the sportswear business. When customers asked him to apply numbers and names to the clothing, he started his second company which is the one that grew to $25 million in sales. Seeing the potential of company #2, he decided he should put all of his energy there. This was a very smart move. He sold company #1 to two excellent employees and today it is generating $6 million in annual sales.

Jim learned that a focused effort will result in success. He also learned that a company can be sold and it can have life after the founder. A business can even improve after the founder is out of the picture!

NOTE: All material that we tape doesn't make it into our 30-minute broadcast and there is an interesting tidbit we want you to know about but we were not able to squeeze it into the show.

There are basically two type of buyers of all businesses. There are synergistic buyers and financial buyers. Synergistic buyers are ones who already own a similar business and they want to expand with the purchase of a company that has a closely-related customer or supplier base. For example, IBM is constantly buying small software companies who have developed a product that enhances an IBM invention.

Financial buyers could be venture capitalists or other types of investors who want to put their money somewhere, grow the business, then sell it. Jim's company #1 was bought by employees who wanted to keep it going. They had relationships with customers so we would call them synergistic buyers. Jim's company #2 was bought by investors who knew nothing about the industry. Unfortunately, the financial buyers made some poor decisions resulting in the closing of that business.

Our lesson learned from Jim Schell: If you want your company to succeed after you leave it, you must work hard to choose the right buyer. Jim admits he was anxious to take the cash and run when he sold company #2. Even though the sale made him rich, he is much prouder of company #1 because it is still prospering.

Think about it

Should you sell your company so that others can improve upon it? Could you sell the parts of your company that no longer fascinate you?

Clip from: Selling Your Business

Salt Lake City, Minneapolis, and Bend: Three people -- Lorraine Miller, Jim Schell and Peter Schenck  -- tell us why and how they sold their business.  Each wanted a change. They knew their business could live on and thrive, so they went to work to find buyers who could take the business to the next level.

Here is a rare opportunity to study those who have fully completed all eight steps within the business cycle. 

Go to all the video clips of this episode...
More video on the eight steps to exit...

Opportunity Knocks

Jim Schell, Founder / CEO

PO Box 9073
Bend, OR 97708
541 317 9490

Visit our web site: http://www.opp-knocks.org/

Office: 541 317 9490

Business Classification:
Education

Year Founded: 1999

Sell If You'd Rather Play Golf

JIM SCHELL: It got to the point where I trudged in at 8:00 in the morning and I didn't go in on Saturday and I even started to play golf. And that's a sure sign that you're burned out in business.

HATTIE: You want to begin with business number one?

JIM: The first one was a small sporting goods company called General Sports -- clever name. We were wholesale and retail. It was a failing company at the time that I bought it. We were probably doing about a couple thousand dollars in 1970, I believe. When I sold it in 1981, we were doing about $2 1/2 million. Fifteen employees -- your basic socks and jocks kind of a company.

HATTIE: So you were selling to sports teams or schools or just general retail? JIM: Teams -- it was retail and wholesale. So the retail part is walk-in; the wholesale part is teams, schools, colleges, whatever.

HATTIE: So why did you decide to sell it?

JIM: I started that business in 1970. I started the second business as an outgrowth of that in 1972. So I was running both of them. By 1981, the second business was probably $10 million in sales, and I was trying to wear both hats and I couldn't. So I kind of morphed into selling the first one and stayed with the second one.

HATTIE: Let's talk about how you sold that business. It's $2 1/2 million. It's retail; it's wholesale. It's in the sporting goods arena. How did you do it?

JIM: Because of the second business, I'd been kind of phasing out for a couple years, so customers, employees didn't even notice. And the buyers, the two key employees, I gave them the sweetest deal I could because I trusted them and they were friends and it worked out for both of us. And today, they're a very healthy $6 million company and everybody lived happily ever after. I took 10 percent down and I think I gave them 10 years to pay it off, because I knew it was going to work. They were good people, and they paid it off in three years--which, incidentally, is kind of a rule of thumb -- if you can't buy a business and pay it off in three to five years, maybe you're buying the wrong business.

HATTIE: What was the second business?

JIM: Since I was in the sporting goods business in the first business, we started a little side business to do the numbering and the lettering on athletic jerseys, and so it kept growing and growing. And where we started, our customers were sporting goods stores; when we ended, our customers were Targets and Wal-Marts of this world.

HATTIE: So now you're free. You've gotten rid of the first business. Now you're free to focus on that. At what point did you say, `I'm selling this'? JIM: That was '81 when I sold the first business, went full-time into the second business. By 1990, I'd had it. It was total unadulterated burnout. There's lots of different reasons for selling businesses. In this case, I had a couple hundred employees, which was way beyond my management Peter Principle, and we'd outgrown the balance sheet, we'd outgrown me as a manager, and business was not fun.

One day, a summer day in June of '89, the business was full of problems, the people were lined up at my door. So I walked out, went to a local park, sat down on a park bench and made a list of all the management skills that I didn't have. And when I looked at them -- things like `attention to detail' and `focus'-- Can you change those? I don't think so. And by the time I got through with the list -- and I've still got it at home somewhere -- I said, `I cannot change. I cannot make the change required.' And so I went back and started the process of finding a business broker and selling the business.

HATTIE: But how did you know to call a business broker?

JIM: From my standpoint, that was the only option. I went to my attorney, who happened to be a good friend of mine, and he's a business attorney, and I asked him what my options are, and he said, `Da-da-da, da-da-da' and `business broker.' And the business broker made a lot of sense, and still does. And it was the right thing to do.

HATTIE: OK. Let's talk about how you found the one you used, and would someone else watching this use the same techniques or how does one go about finding a business broker?

JIM: Referrals.

HATTIE: OK.

JIM: Attorneys, accountants, bankers, one of those three. They know.
 
 

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