Know When to Hold 'Em … or When to Fold 'Em

By Andrew J. Birol, President, Birol Growth Consulting and Randy Curtiss, President,Loveman-Curtiss, Inc., a business appraisal firm in Cleveland, Ohio, and Chair of the American Business Appraisers National Network

You dont have to be a gambler (or a country music fan) to have hummed along with Kenny Rogers sage advice: "You gotta know when to hold em … know when to fold em … know when to walk away … know when to run." And you dont have to fly to Vegas to heed the admonishment, which applies both to a high stakes poker game and to one of the most excruciating decisions business owners face — whether to grow their business or cash in their chips.

Even people who can play a mean game of craps sometimes turn into Hamlet when it comes to their business, and its because of a simple, universal and often disclaimed reason: fear.

What are owners afraid of?

  • Fear of making the wrong choice.
  • Fear of mortality, both business and personal.
  • Fear of the known unknown (what you know you dont know might hurt you).
  • Fear of the unknown unknown (what you dont know you dont know might hurt you).

What if you choose to grow and the market falls out from under you? What if after you sell the market explodes with opportunity? What if you commit to growth and it costs you so much time, energy and money that your marriage breaks up, your family writes you off and your friendships dwindle? What if you sell the business and spend the rest of your life chasing one unfulfilling opportunity after another?

Any one of these things might happen, or they might not. Agonizing over the possibilities is like making the dealer wait while you whip out a calculator to figure the odds of hitting on 17. Its a waste of everyones time and it could get you blackballed from the table.

The Danger of the Status Quo

Human nature is to resist change until the pain of it is less than the pain of not changing. Trouble is, if your business isnt growing its already falling behind.

The status quo of your business is an old, cushiony La-Z-Y Boy, worn in just the right places to fit the contours of your body. Recline back. Reach for the remote.

Sounds great, but only for a little while. What happens if you stay in this comfort zone?

  • The farther you sink into the pillows, the harder it is to stagger to your feet.
  • You stop wanting to change. (You might miss something on TV!)
  • You tried bold action before (driving to the donut shop for a dozen crullers) and it gave you heartburn.
  • Its not time for a commercial yet.

The consequence of all this comfort is a national epidemic: obesity, diabetes, heart disease and more. Businesses, like bodies, are designed to move. Whatever action you choose, do it before its too late.

Now, the Hour?

You know you must commit to action sooner rather than later. But how do you know its the right time?

Sometimes circumstances force your hand. If stockholders, bankers or lawyers become involved, the choice may be made for you. Similarly, owners sometimes fall ill or are encumbered by family situations that distract them from their company. In these situations, its time to sell.

Then theres the offer you cant refuse: someone wants to pay you $10 million to buy a business thats worth less than half that figure. Or perhaps youve got your broker on speed dial when that huge order from a long coveted customer finally comes in. Suddenly youre excited about your business again. Why leave?

In most cases, however, circumstances are less compelling. Then its all up to you. You know its time to make a change when:

  • You arent happy.
  • You are working harder for less reward.
  • The old ways arent working.

If you are dissatisfied with your lifestyle, scrambling to figure out dramatic changes in your marketplace, or simply losing ground without knowing why, its time to make a change. Look around; this is happening everywhere. Manufacturers, priced out of the marketplace they helped create, must decide whether to restructure, move overseas or move on. Small media companies, losing ad money to the Internet, cable TV, and others, must sell out to cash-rich corporations or come up with new sources of revenue to stay independent. The 57-year old VCR repair guy on your corner must learn to fix DVD players and Blackberries or sell his business to the neighbors 21-year old kid, whos already an expert.

Whatever your situation, base the decision to grow or sell on the following criteria:

Your passion. How enthusiastic are you about your business? Whats your gut feeling about the future? If you arent sure, flip a coin. If "heads" means to sell and "tails" means to grow, your gut will react either positively or negatively to whichever side comes up. If your stomach sinks when you see Lincolns profile, you still have a passion for your business.

Your level of caring. If you are no longer interested in your employees, customers, partners or other stakeholders, or if you feel bound to them by guilt, you have your answer. On the other hand, perhaps you enjoy going to work because youre surrounded by great people, or you feel proud of the value you deliver to customers. The more you care about the people affected by your business, the more likely you will want to stay around.

Your confidence. Having confidence means that you have a reasonable basis for your lack of fear; in other words, you believe that the rewards of growing the business outweigh the potential risks. Owners who lack confidence tend to sink into inertia, which eventually sinks the company.

Your expectations.There are four basic phases in the life of a business: survival, confidence, success and significance. If your dreams are limited to making payroll every month, you dont have a lot invested in the future of your company. If, on the other hand, you dream of someday leading your industry and your community, you need to keep on keeping on.

Applying each criterion to how you feel about running your company, assign yourself a rating of either "high" or "low." Then consult the following chart:

Consideration High Low
Passion Hold Fold
Caring Hold Fold
Confidence Hold Fold
Expectations Hold Fold

If your highs exceed your lows, hold on and grow.
If your lows exceed your highs, fold and sell.
If you are still not sure, you need some good advice!

Often these criteria work together. If you are passionate about your business, you probably have confidence and conviction that you can grow it. If, on the other hand, your responses are mixed, look for clues as to why. For example, if you scored high in passion and confidence but low on caring and expectations, perhaps you need to look at your employees or how you build relationships with customers. Find out whats standing in your way.

If You Want to Fold …

If you want to sell your business, you need to figure out what it is worth. Do you know the present value of cash flows after taxes, adjusted for risks? What are the risks to your employers, customers and suppliers? Do you want to step away completely, or stay involved through merging with another company? If so, what do you want your role to be?

Here are some vital steps to take if you want to sell your business:

  • Have your business appraised to get a clear value of its potential. You need to know what a fair offer is and have a basis for countering low ones.
  • Invest in taxes.Your business must have a track record of profitability if you wish to sell for a significant value.
  • Sell on a visible upward trend. Those who jump when the ship is sinking end up cold and wet. Those who pull into port get to go to Bali.
  • Make yourself dispensable, one step at a time. Buyers need to see how well your business can run without you … and you need to see it, too.
  • Talk informally to prospective buyers. Trade shows are a great place to meet people and spread the word that youre entertaining offers.
  • Consult your advisory team for help. They know you well, so their opinions matter. They may help you find a good buyer and smooth the transition youre about to make.
  • Have a clear post-sale goal for yourself. Arial> Hint: Even golf eventually gets boring!

If You Want to Hold …

You want to grow your business, but can you? Consider how profitable you are now. How much will you need to spend to grow? How much can you afford to spend to grow? Do you have a way to finance growth? What are the risks to you, personally?

Once you are honest with yourself and convinced that you have what it takes, commit yourself to boldly grow your business where youve never grown it before. Here are five important steps:

  • Move from ambivalence to conviction. Whether you believe you can grow your business or believe you cant, you are right either way. The level of your passion and conviction will determine your outcomes.
  • Develop your Best and Highest Use®. Focus on what you love to do and do well. Know your strengths and weaknesses and put people around you to compensate for the latter.
  • Focus on outcomes, not tactics. Sales, marketing and customer service departments are only as valuable as their ability to find, keep and grow customers. Know who your best customers are and how you get them. Develop a system for turning buyers into loyal customers.
  • Fulfill and deliver your offer. Make sure your delivery methods and systems are as good as what you sell. The goal here is a well-oiled machine!
  • Repeat the cycle of excellence. Stay focused on your Best and Highest Use, your companys BHU and how you resolve pain or create opportunities for your customers. Honor what your employees do well. Create a company culture that is able to sustain growth throughout the distractions and challenges that inevitably arise.

Deciding whether to hold your hand and bet the farm or fold your cards and walk away may be one of the most important things you ever do. If you are not happy, just do something. Giving in to the fear of change leads to inertia and eventual decay. And thats a decision in itself.

Articles by Birol Growth Consulting are © copyrighted and all rights are reserved. However, articles may be reprinted with prior written consent if attribution is included as follows:

© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at (412) 973-2080, by email at, or on the web at

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