Thinking about selling your business? You probably aren’t surprised to hear that there are many moving parts to getting a deal done, from due diligence and legal agreements to financial reporting and tax strategies. All require careful planning to achieve an outcome that’s in line with your goals.
But often, the biggest hurdle is emotional. The last thing many business owners expect is to grieve over the prospect of relinquishing what they may see as their life’s work. As a financial advisor, however, I’ve seen it happen a number of times.
There’s no universal playbook for getting yourself emotionally ready for a liquidity event. The facts and circumstances are different for every owner. That said, many years of working with business owners through the sale process have taught me that certain steps can ease the transition. Here are five from “Your Next Adventure: Planning for Life After the Sale of Your Business,” the book I co-wrote with my colleagues Marshall Rowe and Jim Fitts.
1. Rethink your notion of retirement. Selling your business doesn’t have to mean retirement, at least not in the traditional sense. You can start a new career or, like many serial entrepreneurs, a new business altogether. You might even pursue charitable causes or explore serious pastimes that your schedule didn’t allow for before.
For many businesses owners, the real issue with retirement is a fear of losing their identity. Running a business puts you at the center of an ecosystem. When that ecosystem moves on without you, it can leave you feeling adrift if you don’t have a plan for what to do next.
2. Make a clean break. It may seem like a good idea to remain involved with the business for a time after closing the sale. After all, the new owners and management will likely have questions, and could benefit from your perspective on a range of challenges confronting them. Not coincidentally, it also puts off the day when you must contend with the fact that the business no longer needs you.
Resist the temptation. Although a clean break can come as a shock, ultimately many former owners find it psychologically healthier than keeping one foot in the business and one foot out. Beyond that, staying involved past the sale can needlessly complicate the transition and end up being less helpful than either you or the new owners had hoped.
3. Network to help you branch out. Entrepreneurs are often so consumed with running the company that they lack time to figure out who they want to be beyond their business and career. That’s a luxury that selling the company can give you. Even before the transition, talk to friends and family about the possibilities they see for you. Think of them as your personal board of directors—a group of insightful people who can offer you guidance and advice.
As you begin defining your new life, expand your network further. Your goal is to learn about the opportunities that exist for you now. Keep an open mind and realize that the inspiration for your next move could come from anyone and anything.
4. Name your destination. Business owners love a challenge, and the first thing they do to tackle it is to identify the problem they’re solving for. Use the same approach to find your new purpose in life. It puts your intellectual energy and passion to work and provides an outlet that can keep post-transaction blues at bay. It can also prevent you from being distracted by propositions from those who have their own interests in mind.
Consider reverse-engineering solutions to reveal the problems you find the most satisfaction in solving. Try things out, and discard those that don’t fit your objectives. This will help you determine the building blocks of your new life and put them together in a way that’s in sync with your authentic self.
5. Move forward in stages. There’s no reason to plan out the rest of your life. Think medium term—say, three to five years. Focus on what you can realistically accomplish during that time that will bring purpose and joy to your life, while laying a solid foundation for the future.
By planning one stage at a time, you’ll give yourself structure and purpose while building in enough leeway to adjust course. That allows you to prioritize more interesting or exciting opportunities as they come along and pull the plug on initiatives that don’t work out. You may recognize this approach as similar to the one you took in building your business, just on a different scale.
Taking Charge Of Your Personal Transition
The transition from business owner to an encore career is an emotionally charged period that can leave many entrepreneurs in unfamiliar territory. The reality is that selling your business isn’t just a financial transaction. It also marks the beginning of a new life, with all the personal implications that entails. Take control by acknowledging the impact that leaving your business will have on you, then proactively address the various elements of your transition so you can look to the future with excitement and joy.
John Weeks is managing director of family wealth & business transition planning at The Colony Group.