There is this lady in the city I live in who has a similar business…
Selling Your Business Can Be Like a Game of Poker
You could have a business that has the most potential, has great products and is better than any of the other comparable businesses for sale, however, if it is not well prepared, and you don’t execute the sale well, you could end up leaving a great deal of money on the table or even worse not sell it all.
I want to share with you some of the lessons I learned from playing and watching Texas Holdem Poker and how these lessons may apply to you and selling your business.
When I first started, I thought it was just a game, made up of a majority of luck and a little bit of skill. Luck in the sense that it depended on the cards you were dealt and how the cards “fell”. Skill was knowing which hands were better than others and the right amount to bet.
It didn’t take me long to realise that it was more about skill than luck. There were so many factors to take into account based on the probability of certain cards being drawn, the amount of money already on the table and the predictability of you and the other players.
Here are five lessons I learned and why they are relevant to selling your business:
1. Just because you have the ‘best hand’ doesn’t guarantee that you will win, or that you will maximise how much you make when you do win.
When I had a good hand and played too aggressively, or too passively the other players would know and fold, leaving me winning the hand but only a fraction of what I could have if I had been a little more patient. Staying in control of the sales process and defining expectations early will set the scene for you to be able to achieve a better outcome.
2. Playing by the numbers is only half the game.
During a game you are trying to watch the other player’s body language and for their “tells”. A “tell” is something a player will do, often unconsciously, which can be a good indication of the hand they have. Like playing poker, there are two key factors which drive behaviour. Logic and emotion. Logically, certain numbers need to stack up and, emotionally, you need to stack up you can’t be giving away too much, and you want to know how the buyer is really feeling.
3. Knowing when to hold them and when to fold.
In Texas Holdem Poker, there are multiple rounds of betting and opportunities as more cards get dealt. There are times when you have bet a sizeable amount of money based on the probability that a card you need to complete your hand will be drawn. However, each card that is drawn reduces the probability of this happening you need to know when to stop betting and fold. This is very similar to when you have committed time to a potential buyer who eventually does not stack up. Knowing when to put in the hard word and be prepared to walk away from the deal can be key in the success of you selling your business.
4. At every table, there is a “sucker”. If you can’t identify them, it’s probably you.
This is a popular saying, and it’s true. What I took away from this is you may be dealing with people who are skilled negotiators and specialise in buying businesses at a discount. Make sure you have access to skilled advisors who regularly do deals that are similar to what you are negotiating.
5. Strategy beats tactics every time.
Every long term successful player has developed a strategy to win. Based on a study most professional players are led more by logic than emotion. This doesn’t exclude them from using certain tactics like bluffing and other “mind games” In other words, they will play by the numbers and follow a process. Having a strategy to prepare you and your business for sale is crucial to get a great outcome.
Unlike poker, when you sell your business you don’t get to play multiple hands, and you will have even more at stake. The fact that you have read this article tells me you are on the right track to start to prepare you and your business for sale. Either that or you just like poker!
Just in case you are wondering I realised that poker was not going to be my profession. Poker to me is a game I can enjoy with my friends. My passion is working with my business partner helping business owners build highly valuable and saleable businesses.
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