For many business owners, selling their business is one of, if not the largest event in their life. You’ve put countless hours in your business and created lifelong relationships in it, too. Without the proper mental preparing to sell your business, the entire sale process can feel more like a divorce than a celebration. You can feel like you’re running your business and running the sales process, all the many questions from buyers, from your M&A advisor, from other key stakeholders. It’s tough getting to the finish line. Once you’ve sold the business, seller’s remorse is all too common, and that is why it is important to start preparing your mind for the sale long before the actual close of the deal.
Before deciding on the best way to exit a business, it is important to consider the reasons for this transition. Some business owners plan to retire, some plan to start a new business, and some plan to re-enter the workforce as an employee. Others work on their health or pick up old hobbies they’ve long since given up on to build their business. It is important to think about the journey, not just the destination.
Before embarking on this journey, a business owner should sit down and think about themselves. Who are you as a person? What are your values? Do you want to leave a legacy or reward, or consider anybody else’s welfare when exiting? When you exit, will you retire, buy another business or work? Will it be paid work or volunteer work? What hobbies/activities will you have? What are your commitments with friends/family? What study or self-development will you take on? What investment projects/new business ideas/revenue making projects, concepts or ideas will you take on?
So, if you wonder how to prepare to sell your business, here are top six ways of mental preparation so you end up with not just the maximum value for your business, but you also begin your life after a successful exit feeling personally fulfilled and gratified post sale.
Learn from Others’ Experiences
As a business owner, you may have people in your network who have been through this process already and who know how to prepare to sell your business. Reach out to them and ask them how they handled this experience. You’ll be surprised how eager other business owners are to give advice and help someone who is going through this process.
There’s also a natural camaraderie business owners feel when they get together. You’ve been in the trenches together, you’ve shouldered the burden of employees and payroll, and successfully built something that creates a legacy for the next generation of entrepreneurs. Talk through with a friend or colleague who has been in your shoes and understands what you’ve been through, both the mechanics of the sale and the roller coaster of emotions you’ll feel as you gear up for an exit.
Work on Discovering Your Identity
If your identity is purely tied up in the business, then selling the business can cause a major identity crisis for you. It’s true – we’ve seen this time and again, especially when the owner’s name is on the business nameplate, or they started the company as the expert who knew everything about what they were going to build. Therefore, preparing to sell your business means that you also have to work on discovering who you are outside that business. The more you detach yourself from the business, the less the close of the sale will affect you. If you know who you are outside of the company, the transition into your next phase of life will be relatively easy, and you’ll be less likely to have regrets post-sale.
Have a Plan for the First Six Post-sale
After the sale, you’ll initially be euphoric, and relieved, and you’ll take some time to enjoy the rewards from all the many years of hard work that got you to a successful exit. Your spouse, family, and friends will be excited to spend more time with you as you transition from business owner to proud seller. But not everything is a silver lining if you haven’t thought things through.
You will likely go from having structure, to absolutely no structure unless you develop a plan. Come up with three to five things you can start to focus on post-sale. Those things may include spending more time with your children or friends, travelling, or even coming up with ideas to start your next business if that is something you’re interested in. The more diversified your list is, the better, since things naturally fall off and others take their place.
Join a Group
Owning and operating a business comes with mental benefits that are not always noticed. Two of those benefits are community and purpose. But just because you sell your business doesn’t mean this is the only place to find these benefits. Joining a group such as a church group or a non-profit can replace that community and purpose you once had in your business.
Many times, as things get busier, charities and nonprofits you were once heavily involved with go by the wayside. It just happens. It’s important to think things through. You’ve got time now – would you like to join a board and work on something that had meaning in your life and still would after the sale? That fills you with purpose. You may not, but it’s very important to think this through, to have the conversation with your spouse, a friend or colleague. You’ll be glad you did.
Develop a Healthy Relationship with Money
When you sell your business, you’ll likely gain more money than you have ever received before. For many business owners, most of their wealth is tied up in the business, and the sale monetizes your most important asset. What are you going to do with that money? It’s important to establish what the purpose of money is in your life. Is it to help your children get through college-debt free? Is it to establish a trust that creates a multi-generational legacy for your family for years and decades to come? Did you plan on giving back to charities? Whatever the reason, having a plan and purpose for your gains will save you from the shock of receiving a large sum of money at the close of the sale of your business.
Get Curious
After years spent intensely focusing on your business, it will feel odd when the thing that has been taking up all your energy and focus is no longer there. Take time to get curious about other passions you have, so you can look forward to the free time selling your business will unlock. It can take time to find that new passion or hobby, and that is why the earlier you start to get curious the more it will pay off for you in the future.
Mental preparation is often overlooked by both advisors and business owners. By preparing ahead of time, not only can you achieve the maximum value for your business, but you can also reduce seller’s remorse significantly. What good is earning all that money if you are depressed or have no purpose after selling the business? Mentally preparing to sell your business is not something to be taken lightly and should be an important step in getting you and your business ready to sell.