5 Most Important Exit Lessons from the Founders of Fresh Heritage

Imagine turning your thriving business into a golden ticket to a new life adventure. That’s exactly what the founders of Fresh Heritage did, and their journey offers invaluable lessons for any business owner.

When the founders of Fresh Heritage, a popular beard care brand for men of color, decided to sell their business in 2021, it wasn’t just about the money. It was about starting a new chapter in their lives filled with family moments and future opportunities. In this article, we wanted to dive into their decision-making process, valuation strategies, and the key lessons they learned along the way.

Reasons for selling

Natrzyk Codner, her husband Gamal and her brother-in-law Jamil decided to sell their e-commerce brand due to major life changes and business reasons. Natrzyk, co-owner and then-COO, said the birth of their daughter and the difficult experience of giving birth made Gamal and her want to spend more time with their family. Despite strong international demand, they realized they didn’t know how to expand globally or sell on platforms like Amazon. They believed that working with someone experienced in those areas would help their customers better and grow their business.

Company valuation

The Fresh Heritage team decided to honestly value their company based on 4 key indicators:

• Market value:They looked at the dominant market value of similar online brands offering cosmetics and personal care products.
• EBITDA margin:With an impressive EBITDA margin of 46%, their operations demonstrated above-average profitability.
• Customer Metrics:Over 3,000 customers have used the subscription program, and the return customer rate has exceeded 40%, indicating a solid and predictable revenue stream.
• Growth opportunities:The potential to expand into new marketing channels and international markets provided significant added value.

Below you will find more data on the 6 most valuable companies, including e-commerce.

Examples of adding value to a company

Several value drivers significantly increased the sale price of their business. The company’s EBITDA margin of 46% demonstrated its solid profitability, while high repeat customer rates and a significant subscription base demonstrated strong customer loyalty and predictable revenue.

Their beard oil has garnered over 3,000 five-star reviews, making it the best product in the industry. Plus, their community engagement, with over 150,000 followers, has provided a solid foundation for direct-to-consumer (DTC) sales.

Finally, their buyer BRANDED found a solid strategic fit. Although they had experience in retail and Amazon, they wanted to expand into DTC sales, which made the acquisition of Fresh Heritage particularly valuable.

Overcoming Buyer Fears

The negotiation and sale process went smoothly, and BRANDED offered fair market value without having to lower prices. However, one of the key issues was the location of the warehouse, which required a decision to be made whether to create a team or relocate the company.

Ensuring regulatory compliance and maintaining up-to-date records of liability insurance and third-party product testing was also key to allaying potential buyer concerns and facilitating a smooth transaction.

Life After Exit and a New Masterpiece

After the sale, the founders experienced a mix of emotions, but ultimately enjoyed their newfound freedom. Natrzak and her family invested time renovating their dream home, spending quality time with their daughter, and enjoying the simple pleasures of life.

It’s important to develop a post-sale plan, knowing that many owners feel lost or depressed after selling their business. Here are 3 essential but ignored post-exit steps.

Six months later, they founded consulting firm Codner & Co. to help other e-commerce founders achieve similar success. This new venture allows them to leverage their experience and guide others through the challenges of growing and selling an online e-commerce business.

5 Lessons for Business Owners Who Want to Exit the Business

1. Align your business decisions with your personal values:When deciding to sell, the founders prioritized family and realized the importance of work-life balance.
2. Leverage expertise to increase growth:Partnering with an experienced buyer can provide them with the necessary skills and resources to expand into new markets and sales channels.
3. Strong financial indicators increase value:High profit margins, customer loyalty and positive product reviews significantly increase the value of the company.
4. Prepare thoroughly for the sale:Ensuring compliance, keeping documentation up to date, and understanding the concerns of potential buyers can make the selling process easier.
5. Plan your life after the sale:Think about how you plan to function after the sale, whether that means starting a new venture or enjoying more free time.

Application

Natrza’s exit story illustrates the importance of aligning business decisions with personal goals, leveraging partnerships for growth, and thoroughly preparing for a successful exit. Every small business owner can learn from her experience to successfully navigate their own big exit.

Remember, your business is not just a job; it is a resource that can create incredible opportunities if managed thoughtfully.