My partner and I just started a dumpster rental business, and one of our biggest fears is that one of our brand-new (and very pretty) dumpsters will catch on fire.
When you hear the term “dumpster fire,” you know what it means. Often accompanied by funny or ironic undertones, it refers to a complete disaster or situation that is perceived as being out of control and poorly managed, especially by those who have no stake in, or responsibility for, having started the fire or needing to extinguish it.
But “dumpster fires” aren’t so funny when they’re yours. I know this because I’ve created many of my own and, most of the time – I’m embarrassed to admit – I’ve been initially oblivious to them. Being the last to know anything is never fun, and that especially applies when it comes with the financial and reputational consequences that business dumpster fires so frequently do.
Unfortunately, too many business owners are oblivious, like I was, to their own dumpster fires, and that ignorance is unnecessarily limiting the value of their companies.
A recent conversation made this crystal clear to me.
An acquaintance familiar with my work told me that he’d hired a business broker to help him sell his business and wanted to know what I thought about it. I asked some questions about his decision to help me understand how I could help.
His answers surprised me, but not in a good way.
I was expecting him to tell me that now was a great time to consider selling because he’d been working hard at growing his business, upgrading its systems, adding talent and positioning it for a bigger future. Instead, he told me how tired and frustrated he was – with his customers, with his people and with the fact that the entire weight of the business fell on his shoulders.
As I listened, two thoughts kept flashing in front of me. The first was that he hasn’t once looked at his current state with a buyer’s lens. The second is that he has no idea that no one is going to want to buy his dumpster fires.
I wish that this conversation and this business owner were outliers, a 1-in-10 example of how not to approach an exit or transition. But unfortunately, these conversations and situations are way too common. What makes matters worse is that they are also completely avoidable with some intentional, advanced planning.
If I’m reading the tea leaves in this situation right, here’s what’s really going on:
The business owner admitted that he is tired and frustrated and that the business depends on him for its future. Nevertheless, he convinces himself this seed of hope the broker planted inside him feels like the easy and perfect way out. All he has to do is let this broker lead him to the promised land.
Except here’s the thing. There’s probably a 1-in-10 chance this will work out even remotely as simply and elegantly as this business owner thinks it will.
You know the saying, “where there’s smoke, there’s fire,” and this example is surrounded by smoke because there are dumpster fires burning everywhere in this business:
- Can’t keep key people
- Business dependent on the owner
- Hasn’t invested in the business
- Intoxicated by the whim of a non-existent offer
Here’s the likely outcome:
- This business owner will pursue an exit path with this broker.
- He won’t be prepared for the due diligence requests.
- He will become frustrated with the process.
- Potential buyers will evaporate, as will the value he thought he’d be getting for his business.
- He’ll get angry, and his relationship with the broker will not end on friendly terms, whether he sells the business or not.
The lesson in this story is simple: The best buyers aren’t interested in dumpster-fire businesses.
Every business has dumpster fires from time to time. That’s business. But the best and most valuable businesses smell the smoke early, choke off its oxygen and extinguish their fires immediately.
What are the dumpster fires in your business right now?
Is it a person(s), an ill-conceived or executed strategy, a lack of accountability, poor culture, a “we’ll get to that later” mentality, an ignored safety hazard? Or could it be you?
My advice? Don’t set yourself up for a 1-in-10 shot at success. You deserve better than that. Instead, do your job. Find experienced planning help. Put out your dumpster fires, and then reap the benefits.
