How to come to the decision to close or sell the company

I have always dreamt of running my own business. Back in high school, in the 1990s, I helped my Dad do the bookkeeping for his company. Back then, the bookkeeping was done on paper, typing in the individual costs and revenues by hand. Costs in one book and revenue in another.

In high school and university, I taught English and did translation work. Then I worked for a large company for a few years. I gave birth to my first child and the thought of my own company matured within me. At the end of my second pregnancy, I received an offer to enter into a partnership with a friend and take over a functioning restaurant. I travelled to the negotiations, highly pregnant, with a bag packed for the birth. At the time, my uncle, an experienced entrepreneur, said to me: why do you need this female partner? What does she know that you can't do without on your own? That was my first lesson in entrepreneurship. I did not enter into a partnership with my friend. And lucky for me!

With two small children - a two-month-old and a two-year-old daughter - I came up with the idea of setting up an online wooden toy shop. It's hard to compare today's online world to that of 17 years ago. Suffice it to say that a quick search confirmed that there was no such shop and I may have found a niche for myself. And that is how, in September 2007, my first online shop Drewniaczek.eu was established.

The purpose of this blog post is not to recount 17 years of adventures and experiences. I would like to focus on how it came about that on 31 March 2024 I closed the store, laid off my employees and moved with one computer and desk to my own bedroom.

Some of my friends say that I had always wanted to sell the company, or at least for many years. And in fact there was a moment, somewhere around 2015-16, that I almost sold it already to two women in the toy industry who wanted to become independent and go from being employees to owning the company. But in the final straight, while I was already figuring out what I was going to do when I didn't own the company anymore, the investors backed out. What did I learn then? A few important things. Firstly, when you think about selling, you don't think about growing the company at the same time. My thoughts were focused on how to break free, and in a small company, where all the slightly more complicated stuff is done by the owner, it's difficult to think about growing and selling the company at the same time. Secondly, the walls have ears and the employees are keeping a close eye on the owner. If you talk too much on the phone, and go outside the company for some of the calls, for example, so that you can talk freely and discreetly, the employees quickly pick up on the idea that you might want to sell the company. And in my case this was the case. Some employees realised what was happening and started looking for another job. Some left and it cost raises to keep the others....

Either sell the company or buy the company.

Since I wasn't able to sell I decided to keep the business going. There were two choices - either sell or grow and buy more companies. So that's how, in 2018, the online shop Ekomaluch.co.uk joined Smartoys (mainly wholesale - exclusive distribution of several toy brands), which I bought in 2014. So I was still hanging around the baby industry, but now not only around toys, but also ergonomic carriers, baby slings, eco-friendly cleaning products or reusable nappies. It was a very good combination. The combined business gave me more even sales throughout the year, i.e. less seasonality (toys mostly sell in Q4).

Then came the coronavirus pandemic (2020). Sales were going sensationally. People were not leaving the house and stocking up on literally everything. Instead of buying 3 packs of nappies, for example, they were buying 10 to stock up on, plus a few wraps of toilet paper. But with the pandemic, the birth rate dropped, and by as much as 25%! Not everyone in the industry felt this immediately. Businesses targeting pregnant women and newborns felt it first, only later did the demographic decline reach businesses targeting nursery or pre-school age children. As I write this article, in Warsaw the owners of crèches and kindergartens are having problems filling their groups. This problem is also felt by language schools, travel agencies organising camps and holidays for children, green schools, companies organising birthday parties, in short, everyone who addresses their offer to children.

Demographers say that the lowest birth rate in Poland will be in about 10 years' time.

How has the market changed after the pandemic?

Apart from fewer births (because here you could say: what are you worrying about, there are still about 260,000 births a year, so the customer is there), the secondary market among parents has flourished fantastically. Vinted and olx are the primary places where people buy and sell baby stuff. As I am involved in the organic market, this is great news. More and more people have started to give a second and third life to items they no longer need. Facebook groups have sprung up, for example ‘Attention, attention rubbish truck coming’, where items are put up for donation for free and people come forward to collect them. It has actually become a fashion! I very much support this. It's a positive aspect of the pandemic and green thinking, although perhaps less optimistic for the trade....

Another change is the change in shopping habits. Fewer and fewer people go to neighbourhood stationary shops. It is increasingly easy to compare prices online. Online offers are increasingly displayed together - that is, for a given product all sellers are displayed together, so it is very easy to find the cheapest product and buy that product. Competition on price alone is growing. We already buy almost everything online and, in parallel, the habit of customers to return goods is growing. Some customers buy several products in different sizes, measure them, look at them at home, leave one and return the rest.

Not to be underestimated when analysing trends in the toy market is also the fact that the age up to which children use toys has decreased significantly. As recently as 10-15 years ago, 8-10 year old children were still playing with toys. Today, most children are introduced to phones and tablets as part of sitting on the potty. Then instead of playing with toys, they want to play virtual games. In more developed countries, there is already beginning to be talk of a fashion to move away from electronics not only among children but also among adults. Will this fashion come to us... and when?

If you own a company, do you have to run it until the end of the world and a day longer?

Any employee can leave the company. He gives his notice and after a maximum of three months he is a free man. He can go work somewhere else, he can not work, he can do whatever he wants. And the owner? In theory, he has more freedom, because, after all, he does not have to explain to anyone that he will be late for work, he can even not come to work and does not have to take time off for this purpose, he can do whatever he wants. But is this actually the case?

I worked for eight years in a corporation and any manager would say that if the owner manages everything, it means that the company is badly managed and that the owner does not know how to delegate responsibilities. However, the reality of small businesses is very different. I once heard at a sales training course in Belgium that owners of companies up to about $50 million annual turnover are always personally involved in the life of the company. And this is because these companies are too small to be able to afford professional managers to actually relieve them of their day-to-day responsibilities.

Well, I still have a long way to go to $50 million. The market is changing. I'm 47 years old. I've been in business for 17 years. And now I'm asking myself: what will my business look like in another 17 years, when I'll be 64 by then? Will I still be receiving text messages at 7 a.m. on Monday morning from my employees that they are feeling unwell today and cannot come to work? Will I still be walking around my warehouse looking for products that others can't find? Will I still assist my employees in responding to customer complaints? Will I have the strength to do it and do I really want to do it?

Over the past year, I have had dozens of conversations with various entrepreneurs. Firstly, I wanted to find out if they all saw reality the way I did, or if I was the only one who caught the vision that I should sell the company. I talked and talked, on the phone, through instant messaging, over coffee, everywhere. A few conversations stuck in my mind:

Kaśka, who is 10 years older than me and runs a bookshop, said to me: Maria, you are 100% right in what you say. However, there is only one difference between us: I have 10 years more and women at this age are already being fired, not hired, so I have to stay in this business until retirement.

Justina, on the other hand, said: Maria, you are right in what you say, but people don't like to hear things that are uncomfortable and unpleasant for them. That's why you have the feeling that you are not understood, because people don't want to hear your message.

Many entrepreneurs in the toy industry, but probably in other industries similar thinking reigns, said: somehow it will be, hopefully it will be better, although at the same time they admitted that for several years profits have been melting away, or the companies have not been generating any income at all. Is this wishful thinking? Or a lack of decision-making skills?

So the sale of the company!

For a year, I had been in talks with several companies about selling my company. The talks went on, I sent out more excel files, shared more data, time passed and there was no effect. This time, I was very careful not to make the mistake of a few years ago and to take care all the time to develop the company in parallel, so as not to squander what I had already done. I had some serious investors. But for the most part, conversations broke down over whether I would stay with the company and what sales result I would make in the following year. The most common proposal was to make the final amount I would receive for the company contingent on the sales result achieved after one year. With such a rapidly changing market, this would really be fortune-telling.

In the meantime, from May 2023 I consistently reduced the value of the warehouse. I set myself a monthly target of what my stock value should be at the end of the month. I organised sales of non-rotating products. Inventory tidying was my daily routine, and the most frequently refreshed statement in Sub-IT (warehouse software) was the inventory for the current day.

In my calendar - a diary in which I don't actually write anything down - I found an entry from March 2023 - ‘for a good two months I've been walking around thinking about how to change profession, what to do not to work in retail’. I guess sometimes it's good to do diary entries like this :-) meaning I've been figuring out how to get rid of the business for a year now, and as I have it, I have it.

But since I can't (can't, delete unnecessary) sell the company, then maybe...then maybe close it and end this phase of my working life?

If not selling it, then closing it!

In the winter holidays, at the end of January/beginning of February, I went to an adult sports camp. Half of the people I knew before and the rest were new to me. As is often the case in such company, the question of work came up frequently. And then I heard myself. I replied: I'm just selling or closing the company! Did that say me? Yes, that was me saying out loud that I was closing the company. If I have to wait an infinite amount of time for a buyer, then some decision has to be made. What if I don't find a buyer at all? What if I keep waiting and the value of the company keeps going down? For now, the company has been profitable all along, but what if it stops being profitable and I keep hoping to find an investor? It's time to make a bold decision! If I don't sell by 31 March, I'm closing!

Already having made my decision, I still went to the toy fair in Nuremberg. I have been going there every year since 2010. Visiting this fair was already a ritual. Most of the time I went there alone, 900 km by car. I loved it very much - a time to think for hours. Business talks with myself. Very valuable. Someone asked me: why do you travel so many kilometres to a trade fair if you want to sell/close your company? I replied: to confirm my decision and to know 100% that I am doing the right thing and that I am convinced. The fair confirmed my decision. I felt ok with what I was going to do.

I gave myself exactly two months to close this chapter of my professional life. I am a taskmaster. Time is scarce. You have to push hard now to make the deadline. The best motivator will be to terminate the office and warehouse lease. I took the plunge and then things took their course.

I found a few companies that bought from me and some agreed to accept returns. I made big sales. The CCC principle was confirmed: ‘price works wonders’. I often had to sell below the cost of purchase. But my reasoning was simple: ok, I'll sell below cost, but from April I'll no longer have the cost of the warehouse, the staff, nothing. So what I lose now, I will save in the following months. It is also true that after 17 years of running a business, in the end the goods that remain are often not very attractive products. As long as the company is operating normally and we are focused on growth, we buy new goods all the time. If we don't sell the old stock, the business keeps going. It is only when we want to sell everything and stop buying new products that it becomes apparent how much there was of the so-called ‘non-rotes’ or ‘shelf-stock’.

Selling goods is one thing. But you also have to sell all the furniture, the pallet truck, the transport bins, the desks, the chairs, literally everything! This task turned out to be more challenging than I expected. I put things up on olx. People were calling, negotiating prices from 70 zloty to 60 zloty, working out each rack. I must have had a hundred shelves to sell! Fortunately, the new tenants bought all the metal racks back from me and Mr Emil also turned up, taking a whole truckload of furniture to furnish his country house.

There were countless trips to the dump, adverts on portals and finally giving things away for free in front of the shop. Deadline is a deadline, you have to empty the entire warehouse.

Finally, on the Friday before Easter, 29 March, I managed to hand over the keys to the property. Actually, I should write I didn't make it, but I DID IT! That's what motivational speakers teach. So yes: I did it! I closed the company by selling its possessions.

What was left was an empty company with a TIN and me. One desk in the flat and my work companion - the dog. Two biggest clients to serve. And time to think about what I want to do next professionally.

I'll say it again: I did it and I'm proud of it!

The most common statement I heard from other entrepreneurs in the last 2 months was: congratulations to you and I envy you.

The most common question I heard from friends was: and what are you going to do now?

What am I going to do? I don't know that yet, but I know what I am NOT going to do, which is a lot! :-)

After 17 years, I made a crucial decision - close or sell the company!

Adres

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