Spotting The Signs That It’s Time to Sell Your Assisted Living Facility
This is the second post in a series on Selling Your Assisted Living Facility. You’re reading from the first chapter about Deciding To Sell.
It’s hard to say when it started for us. The decision to sell our first assisted living facilities didn’t begin at the same time for everyone in our family business. It probably began at different points for each of us and for different reasons.
There are different pain points for every role a person might play in operating an assisted living business. Accounting might be tired of managing tight cash flow. Operations might be tired of the latest licensing issue. HR might be tired of the challenges of training and then losing good employees. Marketing might be tired of the weekly census showing occupancy that doesn’t quite measure up at one or more locations. And in a small business, those roles might be the hats worn by the same person.
So I remember the day when we sat down for a regular weekly meeting and one of the topics was a letter we received in the mail. If you’ve owned an assisted living facility for any length of time, you’ve received the same letter. It’s that letter from a growing company that wants to buy your assisted living facility or from a real estate agent with a long list of buyers ready to make a bid for your company. (I know those letters well – I’ve sent them and received them for years!)
The letter we discussed at our meeting was different. It seemed to be more serious, more real. Or maybe, that week, we were just more ready to receive one of those letters. In any case, the letter prompted the question – do we want to sell?
How do you answer that question? It’s not a simple question to answer. And how do you even know when you should ask the question?
In my experience, there are signs when it’s time to think about selling. The signs are different for every owner. Some signs are as obvious as a stop sign along the road. Others are more subtle, something you only spot if you’re looking for it or someone points it out to you. But there are always signs, like these, when it’s time to think about selling –
- Occupancy is decreasing. Occupancy declines for many reasons. But one reason is that it’s not a priority. It may be hard to imagine for some but an owner or manager who is tired and near burn-out simply isn’t motivated to fill empty units. Before selling, this is an issue that needs to be fixed but if it’s an issue at all, it might mean it’s time to sell.
- Cash flow is getting tight. During the early years of owning your assisted living business, cash flow was probably tight. It was for most of us. That’s because you’re starting up, leasing up, making investments, and paying down debt. Eventually, cash flow begins to improve and you feel some breathing room each month. But, if you’re not in the early years and your cash balance is declining, it may be a sign that a change is needed, maybe even a sale.
- Turnover is increasing. The culture in your facility is driven by you, the owner-manager. And trouble in your team’s culture is often the primary reason good staff members will leave. Yes, they also leave for better money, easier work, or any number of reasons but a healthy culture usually correlates with lower turnover. If your turnover is increasing, your team may be picking up on your own burnout, and it may be time to consider selling.
- You’re not looking forward to Monday. Each of the signs above is really just an outward symptom of what is going on inside of you. Most sellers that I’ve worked with are only leaving their business because they are tired, or worse yet, they’re completely burned out. If you have lost the love for your business, it will show in other ways, and it may be time to consider selling. Hopefully, you are able to muster the energy to improve your facility and move it back in a positive direction, and then you may be ready to sell.
- Things are going great! Owners of assisted living facilities don’t often think about selling when things are going great. Why would they?! Doing something of great value, that you enjoy, and that provides a good income is a dream, right? But if your long-term plans are to retire one day, to try a different career, to move closer to family, or any of the other reasons why owners sell, then it’s important to recognize a good exit point for what it may be – and that is a good time to consider selling.
There are good signs and bad signs that it’s time to sell. Ideally, you’ll spot the good sign and make that decision. And if you recognize one of the bad signs, it’s always better, if possible, to make the improvements needed to exit the way you always wanted. You might even find that an exit isn’t the right alternative after all – and that’s our topic next time – Alternatives to Selling.
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