This is the third post in our series on Selling Your Assisted Living Facility. You’re reading from the first chapter about Deciding To Sell.
Owners of assisted living facilities sell for many reasons. I talked about the Road Signs that may point to a sale in my last post. Those signs may be the first things that prompt the thought of selling. The signs originate from an underlying reason that you may or may not be thinking about. Sometimes, it’s intentional, maybe part of a long-term plan to retire. But sometimes, maybe many times, the reason for selling is simply burnout.
Assisted living is not an easy business to own and operate. Some get started in their assisted living business, at least in part, so they can be their own boss. Then they come to realize that being the boss carries its own challenges, and financial stresses add to a heavy load. For them, burnout arrives slowly but steadily as the pressure of owning a small business grows.
That’s not to say everyone selling their assisted living facility is burned out. Far from it! Many have been highly effective managers that kept the right balance in their life to avoid burnout and help their businesses prosper. The strategic seller has positioned their assisted living facility so that it’s ready to sell when they’re ready to exit.
But for both types of sellers, a question should be obvious –
Is there an alternative to selling? In nearly every case, the answer is yes.
Those who know me know that I’ve spent a few decades helping owners sell. And so I know it may be odd to read here that there are alternatives to selling. But I discussed those alternatives to selling during countless calls with potential clients who called when they were burned out or in another situation that made them consider selling. It was obvious to me, if not to them, that selling wasn’t the only answer to their situation.
Here are some alternatives to selling when you think it’s time to sell:
Take a Break
If you’re feeling burned out, I can guarantee that you need a break. And right now you’re saying to me “Duh! If I could get away, I would get away.” That’s understandable. If you’re feeling that way, I have two things for you. One is more philosophical and the other is more practical.
Here is the philosophical side. Small business owners and managers wear many hats. They often work long, very long hours. They wouldn’t ask anyone to do something they wouldn’t do themselves. Their versatility, tenacity, energy, optimism and so much more are things everyone can admire.
But those same things can get them in trouble. They can also have a tight grip on control. They can become frustrated when others don’t do things the same way as them. They often decide to do it (whatever it is) themselves rather than ask someone else to do it for them. And, with that hyper commitment to their business (their baby in many cases), they never get away from their business.
I’m not even talking about taking a vacation, I’m talking about laying in bed at night thinking about something they need to do tomorrow. I’m talking about being on vacation and taking phone calls every day from their staff. I’m talking about coming home from vacation early because there’s a fire (figuratively speaking) that only they can put out.
This post is about selling an assisted living facility and the alternatives to selling. But if these few paragraphs of my rant on this subject cause you to question some things, you might need a break. You might be on a path to burnout. And another time I’ll go a bit deeper on the subject of how you can be more in control by giving up some control.
Next is the practical side. So you need a break but you don’t know how to get one. Try this.
Start with a recognition that a break is necessary for the health of your business. A break isn’t a luxury, it’s something that will help you be a better owner and manager. It’s essential. A break may be a long weekend to a nearby lake or it might be a two-week drive through the mountains. Like many things, you might start small and gradually increase the duration and quality of your breaks. Breaks don’t come naturally to many of us but they can make us better at what we do.
Next, make a list of what you need to do so that you can take that break. On the list will be things like preparing the person in charge while you’re away (your #2 – if you don’t have one, get one), writing down the processes you follow to do the things you do so that others can do them while you’re away, training others to do those things well enough to put your mind at ease during the break, making sure that all of your emergency procedures are up to date and known by your team, and dreaming about where you’ll go on your break. Once you have that list complete, then do it!
Taking a break from your business is just one of the first steps to help you avoid burnout, and it may be a much better alternative than selling a business you actually love.
Hire Your Replacement
This alternative to selling is taking the previous one up a notch. Sometimes your break needs to be permanent. Burnout can be treated in most cases. And, in other cases, it can’t.
This alternative might be right for you if you need to exit for positive reasons such as relocation, new business opportunities, a new life stage, or other reasons.
Becoming an offsite, perhaps part-time owner-manager for the team at your assisted living facility is a real possibility. For growing companies that add new locations, it’s essential for managers to train up their replacements so that they can move on to another start-up, and do it all over again. This also works if you’re simply ready to slow down, too.
And hiring your replacement might be a great way to continue enjoying many of the benefits of ownership without as many of the day-to-day responsibilities.
Hire a Management Company
If you want to remove yourself even more from the day-to-day responsibilities, then you might want to hire a management company to take over your assisted living facility. Depending on the size and location of your facility, there could be many options available.
Finding, screening, hiring, and managing the relationship with a management company for your assisted living facility is a big subject and beyond what we’ll go into here. But owner-operators can take themselves almost entirely out of day-to-day management and assume a much more passive role in the ownership of their assisted living facility when they hire a management company.
Become The Investor
While hiring a management company may help you change roles from the owner-operator to the owner-investor, there is one more way to do the same thing. Other operators might be interested in leasing your assisted living, rather than managing it for you or buying it from you.
Those other operators may not have the resources to buy your real estate today or they may not be interested in working for you under a management contract with limited upside. But leasing the property from you may give them the freedom to operate their way and greater potential upside by taking your operations to the next level.
For you, leasing your assisted living facility to an operator also has some advantages. Since you’re not selling, you won’t have a big tax bill from the sale of your property and you should have a steady stream of income with some tax advantages (check with your tax professional). Of course, you may have the disadvantage of dealing with a tenant that might not do as well with the property as you’ve done, leaving a question about the reliability of your rent payments. And, if you still have some debt secured by the property, that’s a risk you need to weigh carefully.
Each of these alternatives may work for you if you’re able to give up a certain amount of control and let someone else be “the boss” at your assisted living facility. Many owners aren’t able to do that. They can’t see themselves staying out of their facility and not second-guessing the decisions of the new boss. And so these alternatives may not work for you.
Selling might be the right answer for you. Or it might not be. But consider your alternatives and talk it over with someone before you start down a path that may not be the best one for you at this time.
And if you decide that selling is the right path, then you may have a new question to consider –
Can You Afford to Sell?
It may sound like a trick question but it’s not, and that’s the topic next week. See you then.
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