“If you don’t know where you are going, you’ll end up someplace else.” – Yogi Berra
Preparing yourself is the first step to successfully exiting your business. While it is important to focus on preparing your business to sell, it is also vital to make sure you are both personally and financially ready to move on. You may not even remember who you were before you dove head first into your company, or know what to do with yourself after you leave it behind.
As we discuss in our book Cashing Out of Your Business – Your Last Great Deal, “Your identity and that of the business may now actually be one and the same.” Could this be keeping you from moving forward?
One BTA member recently told us:
“Getting educated and prepared helped me determine my goals and what I was trying to achieve long-term for myself and the business. I needed the roadmap to figure out how much I needed to net from the sale [his wealth gap], figure out what I was going to do with my time outside the business, and make sure that my employees were going to be taken care of.”
Identifying your fears and concerns and exploring whether these may be keeping you from planning is a huge step toward overcoming them. Defining your goals, both personal and financial, and developing a plan for achieving them will help ensure a successful exit. Let’s look at some of the ways that you can start to get yourself prepared.
Are You Financially Ready To Exit?
When deciding if you are ready to sell your business, you need to ask yourself two key questions:
- Are your personal financial plans in order for your exit?
- Do you know how much you need to net from your business ownership transition or sale?
Tallying up what you have saved outside of your business and determining how much money you will need after exiting your business is a very important step. The difference between the two numbers is your Wealth Gap or how much you will need to get out of your business exit to sustain your lifestyle going forward. While this is likely to be the largest transaction of your life, you want to make sure it will sustain you for the rest of your life, and have your money outlive you, not vice versa.
Don’t forget to consider whether you would like to set aside money for family or charity, or other endeavors and work these goals into your financial plan in order to ensure that you will have the income to fund them.
Prepare Yourself Personally and Avoid Seller’s Remorse
Deciding and understanding what you want to accomplish will motivate and guide you in deciding the best way to transition the ownership of your business. Then, you will be able to find the resources to accomplish selling your business, either to insiders or a third party. This will push you forward into your exciting new phase of life as you move away from your business.
It is important to take the time to separate yourself from your business before you transition. Seller’s remorse happens quite often, and the last thing you want to do is regret selling your business too early, and end up bored and depressed because you never took the time to prepare. Some of the leading causes of seller’s remorse include:
- Continued passion for your former business
- Perceived loss of identity and self-worth
- Concern about leaving money on the table
- Worry about what to do with your life after selling
Don’t jump the gun just because you get a good offer for your business. By taking the time to prepare, you minimize the possibility of seller’s remorse, and increase the chances that you will enjoy your life outside of your business.
Set Specific Goals for Life after Your Business
Take the time to think about your passions, and what is going to come next for you outside of your business. Consider setting goals and objectives for each area of your life and plan for the financial support of each. The Platinum Years suggests these facets of your life should be considered:
- Physical Health
- Intellectual Stimulation
- Social Connections
- Income-producing Work
Take the Time to Get Yourself Prepared
Exit planning can help you craft the next and hopefully the best stage of your life. As we discuss in our book, “This is about remembering your true passions, determining what is most important to you, and what you want to do when you can spend less or no time with your business.”
Take proactive steps now to avoid regrets, disappointment, or financial disaster later:
- Identify your personal and financial objectives.
- Plan in advance (at least 3-5 years) before your transition.
- Understand your exit options and the pros and cons of each.
- Be proactive; don’t procrastinate
Don’t wait until it’s too late … the stakes are too high!
Take the next step to ensure your future and the future of your business. Join our Expert Mastermind Group, which is launching soon and let us help you develop and execute your plan.
You will learn from your peers and our work with more than one hundred business owners through three live 90-minute monthly calls that will include:
- Discussion of Best Practices with Q&A
- Interviews with owners who are successfully exiting their businesses
- Webinars with experts on advanced topics, such as:
- Tax Planning
- How to maximize business value
- How to minimize risks in your business
- Key employee retention strategies, and much more!