Why Did This Entrepreneur Sell A Business That Was Still Profitable?
Would you sell your business to pursue e-commerce? This is exactly what Charles Sy did. Learn more about it in this podcast!
When did you make your first million?
Charles got his first million when he was working on his first branch of Cotton Depot. During that time, profit was really good, and he was incredibly happy the moment when he found out he got his first million.
During this journey to a million, what were some of the principles that helped you make that first million?
A good name matters a lot in the field of fabrics. That’s important because the business model in the fabrics industry focuses on loaning.
Charles was fortunate enough that his parents had already built up a good name and that was brought down to him and his siblings. This helped them negotiate better terms with fabric manufacturers that led to better profits for him.
What Charles focused on was to protect and maintain his name. He had to always practice a certain level of integrity to keep his name clean and attractive to his business partners.
Do you have a separate bank account dedicated to all of your liabilities?
At the start of his business, Charles had his own and his business’ money mixed in one account. He segregated by putting percentages on his money. He relied on his gut feel.
However, when the business gets larger, you need to separate your personal money with your business’ money. There should be a strict line between these two.
Now that you handle Strat Quad and Dropify, do you still sell fabrics?
Charles no longer sells fabrics because he already sold Cotton Depot. His passion shifted from putting up fabric stores all over the Philippines to e-commerce mainly because his heart went where the money was.
e-commerce is a booming industry. Charles decided to fully focus on e-commerce once it grew exponentially bigger than his fabric business. Slowly, e-commerce became his primary livelihood while the fabrics business turned into a hobby.
During this transition, were there times when you neglected Cotton Depot?
Charles was not afraid to admit that he was guilty of neglecting the Cotton Depot at that time. It reached the point where mismanagement occurred. Fortunately, he already foresaw this happening and it led to his decision to sell the business.
They didn’t sell the business because it was on a decline. In fact, it was still making a profit. Nothing was wrong with the technicalities of the business. It’s just that Charles’ heart wasn’t there anymore.
If it was still making money, wasn’t it still good passive income? What were some other factors that led to this decision?
Passive income is money that comes in without the need for you to manage it. The problem with retail is that it requires meticulous supply chain management. You have to make sure that things are going smoothly.
Charles tried hiring people to fill in the gap of him not being focused on it anymore. But when he realized that he no longer wanted to continue minding this business, he already chose to sell it instead.
When Charles had already decided to sell fabrics, he had to make sure that he sells the business to someone who has experience. He wanted to sell it to someone who loves the fabrics industry—someone who will spend more to keep it alive. That’s why he gave his business to the highest bidder.
Was it difficult selling your business? How was your experience?
Charles isn’t a person that dwells one the more technical aspects of selling a business, mostly because of his upbringing. He doesn’t need meticulous documentation or an intricate process, all he needs is the trust between two business people.