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 Smooth
Selling
By Caryl Voorhees
From school owner to independent contractor: Downsizing for
increased job satisfaction
Are you thinking about selling your business? I did, and
here’s my advice to current school owners: Protect your hard
work and investment and start planning early. You want to
offer a business that runs smoothly, has a good reputation,
and most important, is profitable. Financial records, the
physical appearance of the lobby and the classrooms, your
reputation, and the talent of your students are all crucial
aspects of your business in terms of presenting it to a
potential buyer.
My school, Dance for Joy, started as ballet classes offered in
my home; I was the only teacher for several years. My husband
offered financial and moral support initially, and as the
business grew, we rented commercial space, invested in and
upgraded equipment, and constructed additional classrooms.
Later I added a variety of classes, hired more teachers, and
relocated the studios three times in 19 years to accommodate
increased enrollment. I was successful in establishing a loyal
following within the community of Brielle, NJ, and the
surrounding area. Eventually, the studio supported nine
teachers and financed my five children’s college educations in
private schools!
My children grew up in the studio as students, assistants,
teachers, custodians, stage managers, sound technicians, and
office managers. I had always hoped that one of them would
eventually want to run the business, but when they chose other
careers, I started thinking about selling the studio. Even
though I’m a businesswoman, the decision was an emotional one
for me. I care deeply about my students and their parents and
wanted the assurance that the results of my many years of hard
work would continue without my leadership. I wanted the sale
of my studio to be profitable for both the buyer and me. Here
is how I made that happen.
I first determined the value of the business with the help of
a qualified accountant who was familiar with my records. I
then looked for a buyer who was a good match for my business
style. This was important for the reputation of the business,
as well as for maintaining the clientele. Three of my
employees were prospective buyers, who signed a legal
disclosure agreement to protect the privacy of my business
records during the negotiations.
I had to present the potential buyers with a complete business
profit-and-loss statement so that they could make a careful
decision and arrange
financing. The value of every asset to be sold with the
business had to be included in the accounting. This included
flooring, mirrors, barres, sound systems, props, office
equipment (including my computer and computer programs), and
summer-camp supplies. Also listed were personal items that
were not being sold with the business. This inventory is
crucial in determining a fair selling price. A good rule of
thumb to follow for a business purchase is that the buyer
should be able to recoup the asking price within three to five
years of profit. Once my asking price was determined, I stood
firm despite pressure to negotiate from one of the buyers.
Once I had decided on the right buyer for my students and me,
I then determined if and how much of the mortgage I would
hold. Although my lawyer advised me not to hold any of it, I
knew that it was unlikely that any buyer would
get financing for
100 percent of the purchase price. I decided to finance
one-fifth of the selling price, which gave me a lump sum to
invest as well as a monthly income for the next few years. I
then determined that I would stay on at the studio as a
teacher and consultant to the new owner, thus easing the
transition for my students and parents. This was also an added
benefit for the buyer’s mortgage company, who was assured of
an experienced business coach for their mortgagee.
On February 22, 2007, all the legal work was completed and the
proceeds were delivered into my hands. That afternoon I walked
into the studio for the first time as a paid employee. People
have asked me if I have regrets about my decision to sell, and
I am glad to say that so far I have none. I am still doing
what I love the most—teaching students the joy of dancing—and
now I have the added bonus of being a paid consultant. My
family and friends are proud of what I have accomplished over
the last 20 years and are glad that I will have more free
time—as I am, now that I am a grandmother. (My grandson,
Julian David, was born in June.) For me, at this time of my
life, selling my dance studio was the right choice.
From both personal and business standpoints, it has proved a
win–win situation.
Photo captions (from top to bottom):
Caryl Voorhees enjoys a lively class with Elizabeth McWhinney
and fellow students.
Voorhees and a lineup of her Dance for Joy students.
All photos by Patton Photography
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