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When It’s Time To Go: How To Close A Store Profitably And Exit The Right Way | September 03, 2014 (0 comments)
El Paso, TX—Last week, The Centurion spoke with Ellen Lacy, formerly of Lacy & Co., about her eye for design that made her career as a retail jeweler so successful. But she and husband Charles also have done something else very well: they figured out how to close a business in such a way that they as owners ended their career as retailers on a happy, high, and well-financed note, and ensured their store’s stellar reputation wasn’t cheapened in the process of going out of business.
Ellen and Charles shuttered Lacy & Co. right after Valentine's Day of 2013. They held a closing sale that began in November of 2012. Read on for some great insights into the closing process as Ellen shares more of their journey with The Centurion Newsletter.
The Centurion: Why was it 'close' instead of 'sell?'
Ellen Lacy: We talked to two different parties about selling. It just didn't work out. One person couldn't raise the money when it came time. The other one decided it wasn't the right move for him. In retrospect, we probably ended up making more money from closing the store, rather than selling it.
Lacy adds that while both parties wanted to purchase the store, both wanted Ellen and Charles to continue to work there to some degree after the purchase. "While we were actively working in the store, it didn't seem to be a big deal to continue working there in some capacity. Now we are extremely glad that we do not have that obligation."
Centurion: When did you think about closing the store?
Lacy: The discussion began about a year ahead of the sale. For us, we started talking about it because of our ages. We thought, 'Wait a second, are we going to do this forever?' We really, really enjoyed our work and discussed closing quite a bit before taking action.
Centurion: How did you start to prepare for closing?
Lacy: The short answer is immediately. The biggest item on our list was to hire the right company to manage the sale. Once you choose a company to work with, they should give you a checklist of what you need to do or have done. That's part of why you hire the people you hire. They should be very well organized and methodical. Obviously they should tailor it to your particular business and listen and act on your concerns. That is a huge part of it. It is probably a good idea to talk to people that you might know that have done a sale like this.
We researched who we hired. We interviewed several companies and talked to other jewelers about their experience. Everyone does it in a slightly different way. (The Lacys eventually chose Wilkerson to assist with their store closing, which was the largest sale the company ran in the country last year. The company also works with those looking to raise money and stay in business, and the Lacys had worked with the company before, in relocating from Abilene to El Paso.)
Lacy: Wilkerson's sent two people who did our sale, Rick and Vicky Ausman. (Editor's note: the four have remained friends. The Lacys recently the Ausmans out for a four-day visit.) This whole process was very eye opening for us. Everyone is not just like us. Rick says that most stores need to start planning two years in advance of your closing. That's how you get the most out of your sale. Once you find the right company, pick up the phone and call. Let them know you are thinking about it, that you're not doing it for a few years. Ask them, how do we plan? They should be able to give you a timetable and checklist of what needs to happen to get the most out of a sale.
Centurion: Did you ever consider doing it on your own?
Lacy: Never! Never even considered it. When we moved and closed the store in Del Rio, we used someone. When we closed the store in Abilene to move to El Paso, we used Wilkerson. For those companies who assist in these types of sales, that is their specialty. They know the ins and outs, what to expect and when to expect it, what needs to be done ahead of time and the fine points that you would not think of ordinarily. They know how to do a lot of these things better than you do.
Centurion: Was closing the right decision?
Lacy: Yes. We are very satisfied with how it ended and know that it was the right decision for us at this point in time.
Centurion: What about the store's employees? One might think that employees would start jumping ship when a store’s owners declare it will close, so was keeping the employees engaged an issue?
Lacy: You give them incentive to stay until the end. We credit Wilkerson with that insight. This 'going out of business' business is a science. They know the situations that must be dealt with in order for the sale to go smoothly. Hire a professional, for the same reason you retain an excellent attorney—because they can do it better than you can. It's the means to an end.
Lacy & Co.'s goodbye message on Facebook.
Centurion: Do you have any regrets?
Lacy: No. Not any practical ones, anyway. My regret is that I'm not 20 years younger and know what I know today. Like everyone else, I would do a lot of things differently and correct a lot of mistakes that many of us make going down the road that we later wish we could undo. Most of them are made from lack of experience and some from ignorance. I think we all probably feel like that. Being the age we are, doing the kind of business we did, the way we ended up financially, I can't have any regrets. It turned out as good as it could turn out.
Going out on an upbeat note: a couple gets engaged in the store during the closing sale.
Do you and Charles have any advice for other jewelers who might be in a similar situation?
Lacy: Yes!
- If you are thinking about retiring, clear out dated inventory now -- not during a closing sale. Clearly, dated inventory is always a problem. However, when you are selling you store, you pay a commission on its reduced-price sales. Getting rid of dated inventory before your sale retains more money since you don't have to pay a commission on its sale and it needs to be cleared out anyhow. Clear it out now! We had a few things older than a year and I still have some old wedding sets; they are hard to get rid of, even in a GOB sale. If we'd started thinking about this earlier, I would have had a 50% off case for old inventory and moved it before the sale. Then they wouldn't be sitting in a safe right now." Lacy recommends few pieces over a year to 18 months stay in stock. Make a concentrated effort to move them out.
- Get out of debt before your sale. We've heard that many people go into a sale with debt and then have to pay a vendor or the bank or whoever. Your debts should be all settled before you go out of business. Carrying debt into the sale takes away from what you are going to do.
- Timing is important. The Lacys' sale began in November and ran through mid-February. For many jewelers, that's the optimal time. However, if you are leasing your building, Lacy has different advice. "Do it around the renewal time of your lease if possible. If you can't, be sure to bring your landlord into your plans but have him/her sign a confidentiality agreement before you move ahead with your plans."
- Keep your reputation solid. Lacy asked Rick Ausman recently for some other observations that he had made over the years when helping jewelers close their stores. He noted that it was very important for the jeweler to maintain his solid reputation in the community prior to going out of business. "You want to maintain your reputation in your community before you go out of business," Ausman told Lacy. "If there is anything that affects your reputation, it affects your sale adversely."
- Plan retirement well ahead and don't just rely on a closing sale. Lacy stresses financial planning. "You need to start planning retirement as far out as possible. Begin investing your money early. Have a 401(k). Have more than just the proceeds of an upcoming closing sale for your retirement. Pay off your debt, start investing, and start building for retirement before you sell or liquidate. Get all that in line before you start the sale."
For Lacy, having her store and her personal finances in order made the sale a worthwhile endeavor. The bottom line? "It was a great ride!" says Lacy. (Editor’s note: The former Lacy & Co. in El Paso is now a Ben Bridge location. Ben Bridge’s website credits the location as having formerly been Lacy & Co.)
Thinking of selling? For more information on getting a proper valuation and getting a store ready for sale, click here.
Join Ellen at the Select by Centurion Show in Dallas as she shares her story in person (with plenty of chances to ask questions!) Ellen will be speaking on Sunday morning, September 7, 2014, 9-10 am.