(What Will You Do With the Rest of Your Life?)
Considering selling your business can be an extremely difficult, emotional decision. For most entrepreneurs, their business represents their major financial investment and a significant influence on their life. Indeed, many financial professionals believe that you should be thinking of selling your business from the day you enter the business. The thinking behind this recognizes the importance of your business as an investment and that if you are considering selling, you will improve the value of your major asset, the business.
Assuming that you haven’t suddenly inherited a fortune from a long-lost relative or won the lottery, you should sell your business when its properly positioned for sale, but not before you’re committed to selling the business. While positioning the business properly and timing is essential to assure that you realize the best value for your business, it’s most important for you first to consider what you will do with your life after you sell the business.
Although as we get older, many of us think about slowing down and smelling the roses and that work is increasing health risks, it is also a thought that work is therapeutic for many and may actually help extend our lives. We all have heard stories of people whose health declined quickly after retiring, but many of us also have friends who have retired at a fairly young age and are enjoying a healthful, enjoyable retirement, playing golf, socializing, vacationing and reading. The point is not one size fits all.
One of the first questions we ask when we’re approached by an owner thinking of selling is: What will you do with the rest of your life? It’s important that you have a plan for the rest of your life. If you’re burnt out with this business, ready to move on to another, or looking to re-locate to another area of the country that’s fine and you should seriously consider positioning your business for sale.
But if you’re of age and plan on retiring, with good fortune, you will live many years after you sell your business. What will you do with your newfound free time? Play golf? Go on vacations? Make more use of your boat? While some have other business and outside of work interests, for some, work is there life blood and the essence of their life. If this is you, our advice is not to sell. We have seen too many deals fall apart once a serious, fair offer was presented and the seller undermined the deal because he/she suddenly realized he didn’t have a plan for moving on.
From a business perspective, the best time to sell your business is not when it’s doing badly, when you’re frustrated and can’t stand going to work. It’s not when you encounter the dismal D’s: Death, Divorce, Declining Sales or Dissolution. The best time to sell your business is exactly when many owners don’t consider selling, when it’s profitable and growing. This is the time when the business will have the most value, when you will be in a position to receive more of the proceeds at the close & when the sale will have the least emotional impact on you.
Once you’ve decided you’re personally ready to consider selling your business, who should you turn to for advice? Your attorney? Your Accountant? A Business Broker?
All of these professionals can provide excellent guidance, but the first person you should ask is……your mate. That’s right, the person who shares your self-interests, cares for you, and knows you best. This is the person who can help address what you will do with yourself to live a happy and fruitful life after your business is sold.
Do you have enough outside interests to replace the energy you derive from running your business? It is hard for many owners to leave their business and the feeling of fulfillment and self-worth it provides. You must have a plan for the future. Your mate will also have to be prepared to have you around the house and realize how that may interfere with normal household activities. While you were active at work and disinterested before, now that you have free time, you may realize how many things done around the house can be done better with some of your great organization skills. Dangerous recipe for domestic bliss!
If you’re ready to sell, but don’t have a plan, perhaps before you sell you should sit down and plan to explore and develop outside interests to replace your daily activities. This may entail considering providing voluntary support to charitable organizations, or perhaps business advice to organizations such as a Small Business Development Center (SBDC) or as a mentor to SCORE. While you may think you’ll come up with a plan after the sale, your mate may soon tire of you hanging around the house, or worse yet, interfering in her daily business.
Okay, now you’ve decided to sell. So, is this the best time? The best time to sell is when the business has been properly positioned for sale .When all transactions have been properly recorded on your financials for the past three years, you have focused on sales and growth and you have reduced your importance to the business.
Hopefully, you will have a long life after selling your business and you must be prepared to enjoy this chapter of your life. If you share these concerns with us, we may be able to structure a deal that allows for you to have a limited involvement with the business, perhaps as a part-time consultant to help the new owner with a specific interest of yours that you enjoy and won’t feel burdened to continue.
We have structured deals for sellers that included a continued involvement in the business and view this as a potential win-win situation for both the seller and the new owner. The seller gets the opportunity to be a mentor and share his expertise, helping perhaps to retain key customers, develop new products, or act as a financial advisor and the buyer gets to reap the advantage of the sellers years of wisdom to guide him to grow the business to even more profitability.
If you’ve gone through this process and decided that you’re ready to think about selling your business, we will be happy to meet with you to review your business, provide a free business evaluation and provide an honest estimate of the value of your business. If our evaluation doesn’t meet your expectations or needs, we can work with you to devise a plan to position your business for sale in the future.