10,000 “Baby Boomers” turn 65 years old every single day!
I know, based on the calls and emails I receive every day, several of these “Boomers” own payday, car title and installment loan businesses they want to sell.
Why sell? Retirement, divorce, tired, start another business, personal need for cash, partnership problems, key employee quit, want to move to Texas/Florida/Arizona…
And what’s the #1 problem I see when I evaluate one of these “consumer loan businesses?”
The seller has failed to prepare their consumer lending business to be sold! You can’t just wake up one morning and decide to sell your payday loan business, your car title loan store, your consumer lending company…
So, what to do? A concrete step a seller can do today? [NOTE: This Tip is an excerpt from our “How to Loan Money to the Masses Profitably – The Bible.”]
- Make the decision today that you want/need to prepare your business to be sold 2 years from today. [Even, if it’s unlikely you WILL want to sell, your goal must be to PREPARE your business for sale!]
- Don’t ever issue equity to retain your key employees! It makes a sale of your business too complicated! Use a “Stay Bonus.” A “Stay Bonus” is a cash reward paid to your key employee(s) as a reward for staying with your consumer loan business through the sales transition to the new buyer.
- Often, the buyer needs somebody who knows the business, the customers, the loan management system… and can keep the business running after the seller departs.
- I’ve been involved in the purchase and sale of a LOT of payday loan & consumer lending businesses over the years. Many of these businesses are purchased by absentee owners. OFTEN, they absolutely insist the seller’s key employee(s) must remain after their purchase. So… how does the seller guarantee this will happen?
- Basically, as you prepare your consumer loan business for sale down the road, you create a long-term cash reward program for your key employee(s).
- IN A NUTSHELL: you set aside a cash amount equivalent to your key employee’s annual bonus in an account specifically targeted for each employee you want to remain on board through a sale. Allow your key employee to withdraw 1/3 of this account’s balance each year AFTER a 3 year waiting period!
- Why is this important? If your key employee walks away from your company, they must make the decision to walk away from a SIGNIFICANT AMOUNT OF CASH AS WELL.
- What else? When selling your company, at some point you’ll have to disclose this to your key employee. When you’re “selling” your key employee on your plan to sell your consumer loan company, you can “top up” the balance in the special “Stay Bonus” account you setup on their behalf.
- Why this is important? Your key employee is richly rewarded for HELPING YOU SELL YOUR BUSINESS, to remain with your company and the new buyer and to make certain the sale of your business is successful FOR ALL PARTIES! WIN-WIN!
For more ideas, strategies and tactics for “How to Lend Money to the Masses Profitably,” get a copy of our newly updated “Bible” downloaded to your Inbox within 30 seconds: CLICK HERE TO GET YOUR COPY IMMEDIATELY.
How to Start a Consumer Loan Business