A Brief Guide to Selling A Business: Thoughts From My BrewPony Exit

Fellow Riskologist,

Have you ever thought of starting a side business? What about selling one?

If you’ve ever started a business in your spare time based on something fun or important to you, then you know two things well:

1. It’s very exciting, and
2. It’s a lot of work.

Earlier this year, I invited you all along for the launch of a coffee bean subscription service called BrewPony that I created with my friend, Jonathan. The launch was a great success. In fact, many of you reading this now are current BrewPony customers. Hope you’re enjoying this month’s roasts!

What you don’t know, though, is that I sold my share of the company back to Jonathan in May and have not been involved in the daily operations since.

Business continues as usual, BrewPony continues to grow each month, and Jonathan is running the show just as he was meant to all along.

I learned so much from the process of creating, launching, and selling this business while working with a co-founder (the first time I’d ever worked like that) that I wanted to share a bit of the process and some of the important steps that needed to take place to make it happen.

Most people think that starting, running, and selling a business is an incredibly complicated process. It’s a lot of work, yes, but the process is actually quite simple.

First, though, a little explanation…

Why did I leave a growing business I created?

From the outside, it probably looks a little funny for me to leave a company that I started and which is doing well financially. Isn’t selling a business a choice for founders who are trying to get out before their house of cards implodes?

Sure, there are a lot of people who create flimsy businesses for no other reason than to sell them before they flop, but that was never my intention with BrewPony.

I asked all of you to come along with me for the ride when we launched, and I would never put myself in a position that would damage my relationship with you—a loyal reader—just to make a little cash from a side project.

There are two reasons I decided to leave BrewPony:

1. It was too “off-brand” for me. While I would never take back the work Jonathan and I did to start this great company, I realized quickly it was too far outside the brand I’d already built. Sure, I could continue to weave the story of risk-taking into the how and the why of the business for me, but when I think about how I can serve you over the long-term, BrewPony just didn’t fit into the model I want to follow.
2. I was holding it back from its potential. Trying to run two completely different companies (Riskology.co and BrewPony) turned out to be an unbearable amount of work. Unless you have a team already built that can help you manage such a feat, I wouldn’t recommend anyone try such a thing! As a result, I wasn’t able to give either project the attention it needed and deserved. Basically, working on Riskology.co was holding BrewPony back, and working on BrewPony was holding Riskology.co back. No fun! By leaving BP, I’m now able to pour myself into Riskology.co again, and Jonathan is able to take BP to the next level without having to wait around for me.

It would be normal to assume this was a hard decision to make, but the truth is it was easy. I was at a breaking point in life. I was getting little sleep, I was highly irritable, and I was watching my own failures hold back both of the projects that meant so much to me.

When I asked myself, “What do I do about this?,” the answer was obvious and not hard to make at all. I knew it was time to let Jonathan—who is incredibly passionate about BP and coffee in general—run with it and that it was time for me to pour myself back into Riskology.co where my passion is.

In the words of Ron Swanson, one of my favorite TV characters of all time, “Don’t half-ass two things. Whole-ass one thing.”

Selling a business should not be a difficult decision. I think if you have integrity, the decision is easy to make because you see it’s the right one to make for yourself, the business, and the customers who depend on your product or service.

How did I actually make my exit?

I am not an expert at selling businesses. In fact, this is the first time I’ve ever done something like this. Most of the time, when I’ve gotten tired of a project, I’ve just ramped it down and closed it. Soon enough, it was as if it never existed.

This is not the best way to go about leaving a valuable business!

When you start a business, the value is not just in the money you earn from your customers on an ongoing basis. You’ve also created an asset—an income producing business that, if you’re a Smart Riskologist, is also worth some multiple of your income and can keep running if you need to step away.

BrewPony is exactly this type of business, so exiting was not very difficult.

Here at Riskology.co, the value of the business is very much tied to me being here to write and create courses that help readers like you do something important… like start and sell side business!

If I go away, Riskology.co is not very valuable (something I plan to fix soon!).

BrewPony is different. No one cares if Tyler Tervooren sells them coffee. They care that the coffee is delicious, shows up on time, and is a good value. Anyone, with a bit of training, can manage that. So, BrewPony is actually a more valuable business than Riskology.co for exactly that reason: I am completely replaceable!

To ensure a smooth transition, though, it was important that Jonathan and I understood how such a transaction would work from the beginning.

When we started working on BrewPony over a year ago, we signed an initial agreement that stated:

• We were equal partners who would share the profits and losses.
• The arbitration process should we disagree about a business decision.
• How either of us could exit the company if we needed to.

This agreement was, literally, about 5 lines long. It was just enough to get us through to launch time when we’d sign a new, more robust agreement.

When it was time for me to leave, the process of figuring out how to do so was pretty easy. First, we had to decide how I would leave and who would take over my position. The two options on the table were for Jonathan to choose a new partner who would then buy my share of the company from me and take over my responsibilities or to sell my share of the business directly to Jonathan.

We opted for the latter so that Jonathan could take full control of the business.

Then, we needed to agree on a price. I initially thought this was going to be difficult, but it turned out to be pretty easy as well. We both had done some research on how to value a business like ours and we were both thinking roughly the same price. The conversation over how to value the business took less than an hour and one glass of lemonade each—a deductible business expense, of course!

BrewPony is a pretty simple business—we sell coffee subscriptions and we don’t really have any hard assets besides our website. Most likely, any small business you create will be similarly simple. Valuing a business like that is typically a case of determining monthly income and multiplying that by the number of months that is customary for the industry that you’re in.

There are lots of other things you could consider as part of the equation but, in our case, we both fully understood the value of the company because we started it together. No need to complicate things.

Finally, we created an agreement that dictated the terms of how Jonathan would purchase my half of the company from me, and how I would transition my responsibilities over to him.

That piece of the puzzle took a bit longer—about 1 page and 3 revisions to get it right. We agreed that Jonathan would buy me out over the course of several months so that he would have plenty of available cash to continue servicing the business, and I would be available for a period of time to help transition pieces of the business that I controlled over to him.

Pretty simple! We’re about three months out from the sale and, so far, everything has gone smoothly.

The real test of any transition, of course, is: Will customers notice? You definitely do not want to cause any alarm for your customers when you sell and transition out of your business. In our case, the answer was a resounding no, so I’m calling it a tremendous success. Even my mom—a BrewPony subscriber since the very beginning—didn’t know anything had changed.

So, what happens now that I’ve sold the business?

This is the most fun part. Once you sell your business and all the details are sorted, you can do whatever you want (unless you’ve promised to stick around for some time)!

In my case, I got right back to work on Riskology.co, the project I’m most passionate about. Now that I can direct my full attention here, there are a number of things I’m working on to make this an even better community for all of us. Here’s a quick sneak peak:

• A complete redesign and rebranding to focus the site on what’s most important to us as smart risk-takers.
• A re-vamp of all my current product offerings to showcase success stories and make my courses even more effective.
• A comprehensive risk-analysis test that will tell you exactly where your strengths and weaknesses as a risk-taker are.
• New courses to serve the core passions of Riskology.co readers.

All of these projects are underway now, and I’ll have a lot more to say about them as I progress with each one.

What’s important, though, is that when you leave a major project in your own life you don’t just go into hibernation. Don’t sit around and wait for something else to happen. Focus your energy on something you’re excited about, and start to give it your all!

Life is better when you play an active role in it. Starting and selling small business projects is just one way to allow yourself to explore many facets of life, create useful things for other people, and support yourself along the way.

A few final realizations about myself after selling a business

I wasn’t sure how I was going to feel after leaving something I spent so much time creating, but it turned out that it actually felt really good! I was just as excited to sell my share of BrewPony as I was to start it. Every piece of the process felt good.

As a result of all this, I’ve learned a few things about myself that you also might connect with:

• I’m much better at starting projects than managing them. I have a talent for getting big projects started, but once they level out a bit, I find it hard and often dull to try to manage them on an ongoing basis. That’s probably why I start so many things. This is a very important realization. I don’t actually need to change anything about myself. Instead, I need to do a better job finding the right people to manage a project for me once it’s past the startup phase. The “start and sell” or “start and delegate” methods could be perfect models for me to follow in the future.
• Starting a business is easier and more fun with a co-founder. I’ve always been a kind of lone wolf who prefers to work alone, but starting BrewPony with a co-founder was a very fun adventure, and it allowed each of us to do what we do best and hand off the things we weren’t good at to each other. This is a better way to work, I think, even if it means sharing your company. Half of something is still more than all of nothing!
• Everything I do should deeply connect with my core message. The message I want to spread to the world is that there is a smart way to take risks in your life, and you’ll be a better person if you embrace that. BrewPony was an extension of that for me, but for everyone else, it was just another fun business that didn’t really connect to that message. In the future, I know any project I start needs to manifest that message if I’m going to be able to give the time and attention to it that it will need to succeed.

This turned out to be longer article than I anticipated, but that’s how I roll! I hope you enjoyed reading about my journey from start-up founder to professional sell-out. And even more, I hope you learned a thing or two about yourself and your own projects from my experience.

Yours in risk-taking,

Founder, Riskology.co