The Wedding Venue Exit Strategy | Selling your Wedding Venue | The Wedding Venue Broker.

Begin with the end in mind: Planning Your Exit Strategy

 

In the exhilarating journey of developing and operating a wedding venue, it's easy to become caught up in the day-to-day challenges and triumphs. However, seasoned entrepreneurs understand the wisdom of beginning with the end in mind. Before you even start searching for an investment property or developing your venue concept, it's crucial to have a clear understanding of your ultimate exit strategy. This foresight not only shapes your business decisions but also ensures that your venture aligns with your long-term personal and financial goals.

For wedding venue owners, there are several exit strategies to consider, each with its own set of advantages and considerations. Let's explore these options in depth:

Building a Legacy

 

One of the most emotionally rewarding exit strategies is to build your wedding venue business with the intention of passing it on to your children or heirs. This approach allows you to create a lasting legacy that can be enjoyed and nurtured by future generations.

When pursuing this strategy, it's essential to involve your potential successors early in the business. This might include:

- Gradually introducing them to different aspects of the business, from operations to finance.

- Providing opportunities for them to develop their skills and passion for the industry.

- Creating a clear succession plan that outlines how ownership and management responsibilities will transition over time.

Remember, building a legacy business requires not just financial planning, but also careful consideration of family dynamics and the interests of your potential heirs.

Phased Retirement

For those who love the wedding industry but eventually want to step back from the day-to-day operations, a phased retirement strategy can be ideal. This approach involves building the business with a specific target date in mind for closing or significantly reducing your involvement in the venue.

A phased retirement might look like this:

1. Years 1-5: Full-time involvement in building and growing the business.

2. Years 5-10: Gradual reduction in day-to-day responsibilities, with key staff taking on more leadership roles.

3. Years 11+: Minimal involvement in operations, possibly retaining an advisory role or focusing only on high-level strategic decisions.

This strategy allows you to enjoy the fruits of your labor while gradually transitioning into retirement. Once you've reached your target date, you have the option to close the business entirely but keep the property to enjoy during your retirement years. This can be particularly appealing if you've developed your venue on a picturesque property that you'd like to call home in your golden years.

Hands-Off Ownership

For entrepreneurs who want to retain ownership of their venue but step away from operations entirely, partnering with a professional management company can be an excellent solution. This exit strategy allows you to retain the value of the asset and generate ongoing revenue from the business without being involved in the day-to-day operations, sales, and marketing.

Most management companies charge between 15% and 20% of gross revenue to handle sales, marketing, and operations. When considering this option, it's crucial to:

- Thoroughly vet potential management companies, looking at their track record with similar properties.

- Ensure that the company's vision aligns with yours for the venue.

- Establish clear performance metrics and reporting structures.

- Consider how this arrangement might impact your venue's brand and reputation.

At Flourish, my consulting firm, I currently manage four wedding venues for owners who appreciate the hand-off ownership model. I send monthly marketing and sales reports, but otherwise manage most of the marketing and sales activities. While this approach can provide a steady income stream with minimal personal involvement, it's important to remember that you'll still bear the ultimate financial risk as the owner. Please select your management company carefully, after a full vetting.

Selling the Venue

Of course, there's always the option to build the business and then sell it, either as a residential or commercial real estate property or as a business with a real estate component. This strategy can potentially provide the largest one-time financial return but requires careful planning to maximize the sale value.

First, invest in a professional, third party verified, business valuation. Your business broker may offer this option to begin, and it’s necessary to understand what your business is worth, without without real estate. This process involves an evaluation of your finances and taxes for the last 3- 4 years, a review of your assets and improvements, and one-time costs that could be potentially added back to the value. 

If you decide to sell your business, investing in a business broker is highly recommended. While their fees (typically 6-10% of the sale price) may seem steep, they often bring significant value:

- Access to a wider pool of potential buyers, including those shopping for wedding venues across the country.

- Expertise in valuing and marketing businesses in the hospitality and events industry.

-Optimizing of financial presentation for the best sale.

- Ability to maintain confidentiality during the sale process, which is crucial for maintaining staff morale and client confidence.

 - Vetting of potential buyers and their financials.

 - Management of the due diligence process.

- Negotiation skills to help you get the best possible price and terms.

 - Completion of legal paperwork to transfer the business and assets, complete with filing to the SEC.

I am currently a Mergers and Acquisitions advisor with Sagewood Business Advisors, through my site, WeddingVenueBroker.com. Assisting Wedding Venue owners with business valuation and preparing and selling their wedding venue for them is a rewarding experience! Although most wedding venues owner make the mistake of listing their venue with a local real estate agent, they are ecstatically surprised when we reach a much broader audience and market working with our group.

This is an excert from The Business of Love: How to Build and Operate a Sucessful Wedding Venue, available on Amazon.com