It is almost universally known that as a startup or business owner, having a mentor can be tremendously valuable. Many people may argue that having a mentor is mandatory in business in order to even have a chance of succeeding. I fall squarely in that camp. If you do not have a mentor for your business, then you are at the least making it harder for your business to succeed and at worst are setting yourself up for failure. Here is a good article about all the ways mentors can help a startup.
I, however, will take it one step further. A single mentor is not enough. Based on my experience, I recommend situation specific or subject matter mentors. What I mean by this is I, for example, had a mentor for managing employees, a different one for customer experience and service and yet another one for operations. As you can see all different situations that are part of operating and running a business. Each of these mentors helped me in those specific subject matter areas.
This brings me to the situation when you are examining the option to sell your company. As always, there are lots of people who will be happy to give you unsolicited and generally unhelpful guidance if you are in the position to sell your company. The act of selling your company or even a part of it is not something to be done alone by an entrepreneur. This is yet another area where having a mentor that has been through the specific experience of selling a company can be tremendously helpful to an entrepreneur.
Here are some of the ways that mentors can help entrepreneurs that are examining the sale of their company.
1. Have A Mentor As An Unbiased Source of Guidance
I have seen entrepreneurs first-hand fly blind through the sales process and it is not pretty. They are actually doing themselves and their company a disservice. I have actually watched as the potential buyer on the other side of the table (uncomfortably) as an entrepreneur literally made it up as they went along during negotiations. In other instances I have seen entrepreneurs look to their investors, the management team, or Board as their sole source of guidance during a sale process. Don’t get me wrong, those are all very important parts of the team for a sale and should absolutely be consulted. That being said each of these constituencies have their own agendas/biases that can get an entrepreneur off track.
This is where an entrepreneur can use a mentor to try to get unbiased guidance on a range of issues that inevitably arise during the selling process. Even if the mentor’s role is only to point out to the entrepreneur that each constituency involved has a bias and that the entrepreneur needs to recognize that bias there is significant value in that alone. Sometimes having someone just point out to the entrepreneur that this is the perspective that a certain constituency is probably coming from can help the entrepreneur understand and then appropriately respond to those perspectives. This is vitally important because during any sale process an entrepreneur inevitably gets pulled in numerous directions by each of the important constituencies. The happens because they are all looking out to make sure their own interests are taken care of during a sale.
2. Getting Guidance From a Mentor That Has Walked The Sale Road Before
I highly recommend that when looking for a mentor if you are nearing or involved in a sales process look for someone that has previously sold a company. I was lucky enough to have a mentor that had been through multiple sales and also acquisitions of companies. The value of that “insider’s” view to selling their own company and how that can help you as an entrepreneur in your own sales aspirations cannot be understated. There just is no replacement for real experience walking down that road and experiencing all of the bumps that inevitably arise during a sale process for a company. This is the wealth of experience that a mentor can bring in conveying to you what to expect when you as the entrepreneur encounter similar and related bumps. Often knowing that the bumps are ahead in the road is half the battle because that eliminates those unpleasant surprises.
3. A Mentor Can Give Amazing Practical Guidance That Can Save a Deal
The importance of getting a mentor who has sold their own company is also that they inevitably have specific practical tips that they can give to you as the entrepreneur to help in your own sales process. These very practical tips can range from the positioning of the sales pitch, the approach to different levels and stages of negotiations within a potential buyer, handling and getting around potential “deal killing” issues all the way to common sense ways to get buyers to the point where they finally say “yes, we will do the deal.” These insider tips can really be the difference at critical times of making sure a deal survives and does not crater during the inevitable issues that arise in nearly every sale.
4. Mentors Can Help Keep You Balanced During The Major Stress of a Sale
I have seen sale processes for entrepreneurs become highly emotional, exhausting and pressure packed roller coasters. There are times when an entrepreneur can feel like they are stuck on an island wondering who is looking out for them. This is where a mentor can step in and assist an entrepreneur to help keep issues in perspective. The right mentor can help keep the entrepreneur focused on the ultimate goal that generally is completing a sale. A mentor’s ability to bring that important perspective and calmness to an entrepreneur can help keep transactions on track while also minimizing emotional decisions that are made due to stress, pressure, and being overwhelmed.
5. Balancing Multiple Constituencies is Made Easier with a Good Mentor
A lot of times the stress of a sale of the company is driven by the fact the entrepreneur is literally being pulled in a hundred directions. At times during a sale process an entrepreneur is simultaneously trying to balance the interests of the potential buyer(s), VCs, early investors, friends and family investors, Board members, management, employees, disgruntled shareholders, customers and partners. When an entrepreneur is stuck in this unenviable position of balancing all of these interests, a business owner can get overwhelmed. This leads to the entrepreneur making bad decisions. A good mentor that has gone through a sale process before can provide invaluable guidance here on the tricky task of trying to balance all of these constituencies. Further, this is where a mentor can help as well with the very important part of guiding the entrepreneur to communicate to each of these parties all in a manner that reduces the risk of the transaction being hung up on one constituency’s demand or misunderstanding.
6. A Mentor’s Network and Ability to Run Interference Can Save the Day In Tough Situations
At times during the sale process, an entrepreneur needs to call in reinforcements. Sometimes it is for the reason of trying to “save the deal” or it may be finding a person that can help calm a constituency that is threatening to hold out on an issue. This is where an entrepreneur can turn to the mentor and ask the mentor to speak to a constituency on the entrepreneur’s behalf or have the mentor reach out to a mutual contact of the constituency to try to calm and allay the issue. A good mentor with a strong network here literally can help make the difference between a sale closing or a transaction that never gets done.
It is for all of these reasons (and probably a few more), I so strongly recommend getting a good mentor in your side when you go through a sale of your startup or business. If you are at a loss and cannot find one for some reason, look me up on Twitter at @rajmalikdc or find me on LinkedIn and I can help you find one.
Raj Malik was recently CEO & Co-Founder of KikScore, a startup that helped small online businesses use their own track record of reliability and trustworthiness to increase sales and close more leads. KikScore’s technology was sold to Google in May 2012. Raj was a contributor to his company’s blog at blog.kikscore.com, a past speaker at SXSW and is passionate about helping small business and entrepreneurs succeed.