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- Sell or Scale? The CEO Dilemma
Hey Girdleyworld!
As a guy that owns multiple businesses, here’s a question I get a lot:
Should I sell my business, or hire a CEO to run it for me?
Here are my thoughts!
By the way — if you own multiple businesses, you should 100% consider coming to HoldCo Conference 2025. Learn, connect, talk shop (and relax) at a stunning resort in Sundance, Utah. Less than 15 tickets remaining!
Selling your business vs hiring a CEO
I’ll be honest: this question frustrates me a little. Because often people are asking for the formula that spits out the “right” answer.
The reality is, business is more complicated than that. It’s like jazz — you make your decisions based on context, responding to what everybody else is doing and what seems right at the time.
So there’s no recipe or formula. But I’ll tell you how I think about it.
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First, make sure you’re framing the question properly.
Because if you’re asking this question, you’re at a crossroads: you want out of the business, but you don’t know how to do it.
The first mistake: this isn’t all about what’s best for the business. It’s what’s best for you. What do you want for yourself, your family, your community? That’s the stuff that really matters.
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Once you’ve framed the question, here are 8 questions to consider.
What’s your vision for the business?
Do you want it to keep growing until it’s enormous? Or is it happy at its current size?
What’s your ability to reach that vision?
If you’re dreaming of a huge corporation, do you have the skills to lead? Do you have the desire, the energy, the resources?
It’s okay if you don’t. I’m not as great at operating large businesses as I’d love to be. So I’m better off hiring those people than trying to do it myself.
It’s common for people to either be starters or finishers, but rarely both.
What is your risk tolerance?
Hiring a CEO is riskier than selling. You get the upside of the business income. But you have to trust the CEO to make important day-to-day decisions, and they might screw it up. I’ve seen CEOs sign contracts that destroy companies.
If you sell, you have cash in your bank account and nobody can take that away from you (except inflation).
I’M DOING A THING!
Michael here! Have you ever considered buying a franchise?
I used to think it wasn’t “real” entrepreneurship, but I’ve realized I was wrong.
It actually lets you fast-track the acquisition process, and instead of spending months (or years) searching, you get straight to growing your business.
At my free lecture next Thursday, we’re talking all things franchising with franchise expert Connor Groce, here to answer all your tough questions.
100% free — sign up to attend live or get the recording.
How much do you think the business is going to grow?
If you think you could hire a CEO, coach them, and keep the business growing 30 or 50% / year without you… that’s pretty appealing.
But if you think your market’s going to shrink — demographics, regulations, any other headwind in the macro environment — then that’s a good reason to sell. (Of course, buyers will price that in too.)
Are you ready for the pain in the ass of selling?
Real talk: selling a business is hard. You have to run a whole process, and it's an emotional roller coaster.
Somebody has to make a market, the buyers have to evaluate your business, figure out the challenges, the upsides, the resources, do all their due diligence, negotiate contracts, purchase and sale agreements, handle customer transition… it’s a lot.
It might take a year or more. And at the end, you might not sell after all. In the meantime, the business can suffer. It’s a huge distraction for you, and the uncertainty is an emotional ride on all the staff.
Can you be a passive owner?
There’s no point hiring a CEO if you don’t let them be CEO. Being a board member or passive owner is a whole different ballgame.
I’ve seen people try to make that transition and they just can't do it. They're swooping in all the time, they're hanging around the office, they're talking to employees and managing people behind the CEO’s back.
For them, the only way they can exit their business is by selling it.
Can the business survive without you?
Lots of businesses are just glorified jobs. If your business is all relationships and handshake agreements, then it might not survive when you leave the hotseat.
If that’s the case, you have some work to do before you can consider selling or hiring a CEO. Your first goal should be building your business to survive you being gone for a month or two. (This is a good goal for any business, by the way.)
What’s important to you?
Think about what you really want. Do you want cash in the bank? Time in your day? Are you ready for a new chapter in your life?
If you’ve successfully started a business, you’ve got the skills to succeed.
So what really matters to you? Figure that out, and it will point you in the right direction — even if it’s not the easiest path.
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3 things from this week
Appetizer: My podcast co-host Bill’s paean to the SBA 7a program. I’m working on my own love letter, but his will do for now:
Main: We did an episode of Acquisitions Anonymous where we talked about buying Infowars. Then The Onion made a bid. Now WOW.AI — an “artificial intelligence entertainment company” — is in the running, and a big part of their purchase offer is, of course… a memecoin. Could it work?
Dessert: I made a YouTube short about my kid running a fireworks stand. Super proud of him. Give it a watch!
Thanks for reading, and have a great week!
Michael
P.S. Don’t forget to join my franchising webinar on Thursday! RSVP here.
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