If you’ve been thinking about selling your business, you should first consider whether you would be better off hiring a CEO or manager instead of getting rid of the business entirely. There are pros and cons of each decision.
Thus, you should weigh it carefully because once you've sold the business, it's gone for good - unless you can convince the person who bought it to sell it back to you. If you haven't already done so, you might want to check out our guide to selling a business here before you start thinking about whether to hire a manager or sell your business.
Pros of selling your business instead of hiring a manager
The number one reason many business owners decide to sell is because they want to get out of the business for one reason or another. However, before choosing to sell, you should make sure you actually want to be out of the business. If you want to stay in the business, you can do so by hiring a manager or CEO instead of selling outright.
One benefit of selling your business instead of hiring a manager or CEO is the fact that you have no more liabilities associated with owning a business. There will always be the possibility of legal headaches, however small, while you own a business.
You may also want to sell your business if you just don't want the other hassles associated with owning a business. Even if you have a manager or CEO to handle the day-to-day operations, you will still have to deal with some issues, which will vary depending on the type of business it is. Of course, the caliber of the manager you hire will dictate how many problems you have to deal with.
Another reason you may want to sell instead of hiring a CEO or manager is if you want or need a sizable influx in cash rather than a steady stream of smaller cash inflows. Something may come up that requires a large amount of cash, and selling your business may be able to provide that cash.
Pros of hiring a manager instead of selling your business
The biggest reason to hire a manager instead of selling your business is because it will provide a steady stream of income, and you won't even have to lift a finger. It becomes nearly like passive income because someone else is doing all the work, and you're raking in a profit.
Of course, you must decide if the profit you are earning is high enough to warrant dealing with the liability and other potential hassles that may come with owning a business. You may want to think about hiring a manager or CEO as a test to see how much of a profit you can bring in while also paying someone to manage the day-to-day operations for you. Then if the profit isn't enough to make it worthwhile to deal with the other issues, you can always decide to sell your business.
Another reason you might want to hire a manager instead of selling your business is if you want to have an easy way to get back into the industry after you have quit working. Some business owners enjoy the industry they have worked in so much that they still want to be able to dip their toe in the water from time to time. Hiring a manager or CEO will enable you to do this because you will still own the business even though you don't manage its daily operations.
How to decide
Now that you understand the benefits of both selling your business and hiring a manager, it's time to weigh those benefits to see which meet your priorities. If you are simply ready to be done dealing with any kind of business, it truly is best to sell, no matter how much profit you make from it. The good news is that if it is a high-profit business, you should be able to get quite a bit from selling it.
On the other hand, if you think you might regret selling your business one day, you should just hire a manager because you will easily be able to get back into the industry after taking some time off. It's much easier to hire a manager as a test temporarily to see whether your life is better without having the business to worry about it. You may even discover that you have chosen such an excellent manager that you literally have nothing to worry about except collecting profits every week.
If you hired a manager but things aren't going so well, the problem may be as simple as finding a better manager. The key is to find someone who requires little to no interaction from you to operate the business.
What to keep in mind if you're hiring a manager
If you decide to hire a manager or CEO instead of selling your business, you will have to think carefully about their compensation package. Depending on what kind of business it is, you may have to give them equity in the business as part of their compensation. Even if they would work without receiving equity, you may still want to provide them with some because it ensures that they are motivated to push the business to perform to the highest possible standard.
Sharing equity with them aligns their interests with yours even more than their paycheck does. In some industries, paying them equity may not be the standard, so you should look for other ways to align their interests with yours. One alternate way to do this is to offer performance bonuses.
You may not have to look very far for a manager or CEO for your business. There may already be someone working at your company who is perfect for the job, so you should examine those who are already in positions of authority to see if you could put them in charge without having to oversee them.
Deciding whether to sell your business or hire a manager or CEO is a major decision that has the potential to change your life forever. It isn't a decision you should make quickly or without exploring all your options and thinking about the changes what you do will bring.