Sometimes you put so much focus, energy and resources into building your brand that when you finally monetize your brand equity, you are unprepared for what comes next. Having your brand acquired seems like all you need. It is totally gratifying.
But life goes on, only a bit differently now. We discovered several unforeseen consequences that you should be prepared for, preferably in advance of selling your brand. Unless your company is a large corporation with many brands still requiring management after the acquisition, you will most likely be selling your business along with your brand. Here are some things to be aware of when you sell your brand.
1 Health Insurance. You may have been part of a group policy in your company. In fact the company may have picked up all or most of the premiums. No more! Now you have to get your own insurance, and unless you can join a group, the cost can be staggering. Dental insurance is very expensive outside of a group. Be prepared to put out more cash for your health.
2 Credit. Even with a high FICO score, it’s difficult to get a loan without an income. No matter how much you have in the bank, your ability to remortgage your home to get lower rates, or borrow money to start a new business is challenging if you are without a pay stub. Now you have to buy most large purchases in cash.
3 Write-Offs. When you had your business it was easy to justify deductions for business meals, travel, and various other expenses. A portion of your home-office rent, utilities and maintenance could be claimed for business. Once you have sold your business, it’s all non-deductible.
4 Infrastructure. The infrastructure of your business is easy to take for granted. IT support, legal advice, and administrative services were all at your fingertips. Now you have to start over, find quality services and pay out of pocket for what you used to get through your business.
5 Work – Home Separation. Now that you have sold your business, you’ve lost your office space. If you choose to start a new business, it will likely be out of your home until you can justify renting or leasing office space. You will soon learn that conducting business from your home can be very disrupting.
6 Contacts. Your industry will keep on changing after you have left it, and the relationships you had on a daily basis will quickly disappear. Unless you make a point of keeping on top of the ever-changing industry you were once a part of, the mover and shakers will change, leaving you in the dark ages.
7 Reputation. Ideally, your acquirer continues to maintain the value of your brand and continues to grow it. If your brand dies, your reputation as a successful brand builder will suffer. Choose your acquirer carefully.
8 Managing Funds. When you were building your brand, you were cash-strapped because you were constantly reinvesting every dime into growth. Now you may be responsible for managing your retirement funds, possibly without prior experience. This can be a big education and a full-time job not to be delegated!
We have often said that entrepreneurs are brand builders. Their mission is to add value to their brand and they realize that value through a monetization event. But there are many realities to consider once you no longer have a business that supports your lifestyle. You still have plenty of work to do, but you do it without the support you had grown used to, and without a paycheck.
Who Are We.
Having built and sold a bestselling national brand, we appreciate the value of brands and everything it takes to make them successful. Companies are valued by their brand equity. Achieving and maximizing brand equity requires tremendous respect for all your customers, from your wholesaler to your end user.
Starting in our laundry room with no money and no knowledge of the industry, we built the famous Barefoot Wine brand. We learned a lot they don’t teach in school and much of it the hard way. Although our success was in consumer products, our real world experience will be helpful to anyone looking for information and advice about brands.
We have written the New York Times Bestselling Business Book, The Barefoot Spirit: How Hardship, Hustle and Heart Built America’s #1 Wine Brand, which chronicles the history of the famous brand from its inception through its acquisition. Our book is now required reading in schools of entrepreneurship across the country. We hope this book will provide inspiration and encouragement for all those contemplating starting a brand or wanting to improve their existing brand.
Michael Houlihan and Bonnie Harvey
-Barefoot Wine Founders