As a business owner, do you ever catch yourself asking the question “What am I going to do after I sell the business”? Finding the answer to that question is something that should be done sooner than later. To be specific, as the owner you should have a Personal Exit Plan at least 2 years before you actually begin to research the process of selling your business. When I share this with owners their response is “this sounds good but why should I take the time and resources to formulate a Personal Exit Plan”? In short my response is, “For peace of mind and the ability to move on after the sale of the business. 73% of business owners have “Sellers Remorse” within twelve months of selling the business which means they have not emotionally moved on from the sale of their business.
In speaking with and interviewing owners who went through the sales process many said they felt some type of remorse. Some of the reasons offered were:
- Overwhelmed by lack of preparation for after the sale
- Felt like they did not get the value for the business they were looking for
- Employees were thought of as family
- Was not personally ready for life after the transaction
In fact, some owners went on to say candidly “I was not prepared”. “I was so focused on the actual transaction that I did not spend any time trying to understand, deal with, or plan for how the sale of my business was going to personally impact me”. And when probing a bit deeper; owners shared they were not emotionally prepared for life after the transaction. Several business owners even went as far as to share that they did not go through with the transaction due to the fear of letting go of the business and fearing life after the transaction.
Selling your business is arguably one of the most:
- Time consuming situations
you will go through and it is equally important to be emotionally prepared for the sale.
HOW CAN THE TRANSACTION EFFECT YOU EMOTIONALLY
When working with business owners, financial buyers and investment bankers the first question I will ask the business owner is “Are you emotionally prepared to sell your business? As you can imagine it is a question that owners aren’t use to fielding. After about 2-3 seconds of the owner looking back at me with a confused look they say “I think so” or “I’m not sure”.
So, I will walk them through some of the specific areas around the transaction that can cause an owner to be emotionally overwhelmed, unprepared and negatively impact the negotiations. Let’s look at some of the emotions you as a business owner could face when selling your business. To do that we need to look at specific areas around the transaction that will impact you and your emotional preparedness. Those areas are:
- Exit Readiness
- Personal Goals
- Relationship With Staff
- Motivation & Passion
- Reasoning For Selling the Business
Exit Readiness: Are you and business prepared for the transaction? If not, you can understand how this may cause HESITATION.
Legacy: Have you mapped out what you want you and your family’s legacy to be? Not having a legacy plan could create a feeling of LACK OF PURPOSE.
Personal Goals: What is your bulleted “Road Map” look like for you after the sale? Have you created a twelve month personal plan highlighting goals and activities you want to achieve the day after the sale for the next year. SUCCESSFUL PEOPLE NEED TO FEEL SUCCESSFUL.
Relationship with Staff: What is your plan for continuing relationships with certain employees of your business? For those that been with the company from the beginning you want to make sure they are taken care of. SENSE OF BELONGING
Motivation & Passion: As a successful business owner your passion is a key part of your success. Not having an endeavor that you can be as passionate about could create a LACK OF MOTIVATION.
Fears: What are your fears or reservations in regards to selling your business? Do you have a post transaction plan to help deal with those fears? Do you have emotional support to help you through those difficult moments and keep you focused on the task at hand? Fear can have real consequences to a selling owner. I have had owners tell me they walked away from a transactions for fear of what some owners call THE GREAT UNKNOWN.
Reasoning: This is a big one! If you don’t come to terms with why you are selling the business it can be the main reason for “Sellers Remorse” and can cause REGRET.
It is important to assess your personal preparedness. Having a sound emotional foundation to get through the sale will only benefit you and make your business more valuable. When sellers see a sound, rational buyer that exudes confidence and the ability to temper the emotions of the negotiation process they begin to extrapolate how that emotional fabric has been woven into the business hence, making it a more manageable business to run and more valuable to the buyer. I have seen when buyers look at businesses with a rational, emotionally sound owner verses the owner that is quick to judgement, knows everything and snips at every comment during the due-diligence period. Yes, the buyer is there to negotiate to buy your business but if they had two equal businesses that would provide the same growth in value, diversification of product, customers, etc. buyers will naturally gravitate towards the business withe the owner that is emotionally sound.
One of the personal benefits to Emotional Planning is increasing your emotional intelligence which can lead to:
- Increased Leadership Ability
- Improved Decision Making
- Improved Negotiation Skills
- Overall Increased Personal Well-Being
So how do you know you’re emotionally prepared for the next phase in your business? Click on the link below and take a quick 8 question quiz.
Survey: The-EXIT: Emotional Readiness Survey
Email me at Brett@The-ExitPC.com for a free personal evaluation. This process is confidential and will help you discover what you need to work on in preparation of the sale while reducing the emotional impact.