Any business owner can tell you about the costs involved with starting a business. No matter how well you plan, unexpected costs always crop up — usually when you’re least prepared to handle them.
But what happens when it’s time to close the business? How do you prepare for an event that you’re not sure you even want to happen? And, is selling better than outright closing? How do you find someone who’s qualified to buy what you’ve worked so hard to build up?
They don’t tell you about this part in Business 101. Selling the business you worked so hard to build up can be time-consuming, stressful and expensive.
If only there was a better way… or is there?
The best way to sell your business these days might be through a contest.
Win This Cupcake Bakery in a Writing Contest
Mix Cupcakerie and Kitchen in Waitsfield, Vermont, is closing after two years in business. Owner Carole Keleher’s partner took a job that will require leaving the state. Rather than spend months trying to find the right buyer, Keleher is accelerating the process. She’d like to leave Waitsfield by early July.
Want to win the bakery? Here’s all you need: A 100-word letter about why you’d be a great owner; your own cupcake recipe, presented in a step-by-step format; and a $75 entry fee.
The winning entry will receive the entire bakery, including its fixtures and equipment. Two part-time employees who know about the business will stick around, as well. Keleher will provide 80 hours of training to the new owner, and will cover the first two months of rent, utilities, ingredients and payroll costs.
Why Sell a Business Through a Contest?
A contest is a fun and exciting way to sell a business, but it’s also a savvy choice for owners who want to cut the cord quickly. Keleher needs $22,000 to walk away from her business — basically the cost of her baking equipment. But if nearly 300 people apply to win the bakery, she’ll be able to cover those costs and move on with a clear conscience.
If she doesn’t receive enough entries and donations (her crowdfunding page through Dreambroker Industries also accepts donations), she’ll close up shop without attempting to sell traditionally.
Keleher isn’t the first to try this route.
Humble Heart Farms recently announced a contest to give away a 20-acre goat farm (goats included). That contest requires a 200-word essay and an entry fee of $150. The farm’s owners hope to raise $375,000 to pay off their mortgage before leaving the farm to the next owner. Another 35-acre horse farm is up for grabs in Elkmont, Alabama for $200 and a 1,000-word essay.
Meanwhile, the Cape Ann Cinema & Stage in Gloucester, Mass., will go to a contest winner as well. “My last vacation was in 2004, and it has finally caught up with me,” explained owner Bob Newton in a blog post. Instead of closing the movie theater, the owner wants to see it thrive beyond his supervision.
Newton’s contest costs $99 to enter, and requires 250 words on “Why I Want to Own and Operate a Small Seaside Cinema.” The winner gets majority ownership of the movie theater and $20,000 to put into the business; Newton will also provide advisement in the first year.
Earlier this spring, the Center Lovell Inn and Restaurant offered an essay contest to take over the picturesque Maine B&B. Entry costs $125, but the winner will receive $20,000 to get started.
And the Center Lovell Inn may have started this trend 20 years ago. Retiring owner Janice Sage earned the right to the inn with her own essay in the early 1990s. When she was declared the winner, Sage quickly packed up her life in Maryland and headed to Maine.
Who Really Wins: The Former Owner, or the Contest Winner?
For the business owner who doesn’t want to sell their “baby” to someone who might not be personally invested, a contest can be a saving grace — a chance to pass on the business to people who truly love the idea of running a B&B or goat farm or bakery.
“Investors who didn’t seem to care about farming were the only ones who could afford to buy it,” Leslie and Paul Spell of Humble Heart Farms told Buzzfeed. Sage was ready to retire, but if she sold the Center Lovell Inn, it might have been torn down for new development; instead, her contest stipulates that the new owner must operate it as usual for the first year. Keleher wants to leave town to be with her partner, and Bob Newton wants to be free from the stress of day-to-day operations.
And the money doesn’t hurt, either. If a contest goes well, those entry fees can pay for remaining amounts due on equipment, cover business debts or just provide a cushion for the owner’s retirement.
If there aren’t enough entries, though, the owner is back to the drawing board — and in some cases, traditional candidates may have already been exhausted.
The potential winner faces pros and cons as well. Taking over a business involves more than just unlocking the door and turning on the lights. The new owner needs to have some business savvy and be able to strategize to keep the business thriving after the transition. Business may boom during a contest period due to extra attention, but what happens when the press is gone, the old owner has left town and you’re sitting at a desk piled high with bills?
It’s always exciting to be a contest winner, but it must be difficult to choose a new business owner based on a short essay. And it’s got to be hard for the selected winner to anticipate what they’re walking into when they take the reins.
We’ll look forward to hearing more from these businesses as they choose their winners — and then how those winners do as new business owners. Writing an essay might be a challenge, but we’ll bet it’s a lot easier than managing 85 goats.
Your turn: Have you entered any of these contests to take over a business? What will you do if you win?
Lisa Rowan is a writer and editor living in Washington, D.C. She cohosts Pop Fashion, a weekly podcast about fashion, business, and creativity.