A business exit is a significant transition period that gives owners an opportunity to reflect on their own purpose.
A business exit is a significant transition period that gives owners an opportunity to reflect on their own purpose. The exit itself is a time to celebrate successes while also strategically planning out personal and professional next steps.
Ideally, entrepreneurs should start thinking about their exit strategy while they are growing their business and then get serious about exit planning three to five years before the anticipated sale. This gives time to address topics that could affect an ideal business sale, such as hiring key people and addressing customer concentration.
Question and Reflect
Begin the planning process by asking questions and reviewing these topics with friends, family and advisors. This reflection process may last weeks, months or even years. Answers to these questions can identify the ideal buyer and direct how to spend time after the business sale.Why was the business started? What was learned by owning a business? What was the mission through this business? What activities necessary to running the business were most enjoyed and provided the most fulfillment?
Next, start thinking about cash flow. Ninety-five percent of business owners will experience a drop in their income and reduced availability of funds after the sale of their business. Keeping assets liquid longer will give owners freedom during this period of many important financial and personal decisions. Often owners will begin the process of designating funds for philanthropy and investments too soon, which gives them less flexibility if they change their mind once the dust has settled.
Find the Right Buyer
The type of buyer can have a major impact in entrepreneurs’ satisfaction when they are no longer the owners. Many individuals are surprised by how much their role shifts when they bring on a buyer who takes control of the areas they once had sole discretion. Sometimes owners will find that the highest offer doesn’t necessarily equate to the best potential buyer and that other factors are more important to them, such as their own new role and involvement.
Plan Daily Life
Finding fulfillment in life outside of the day-to-day pace of business ownership needs to be an intentional plan. A great exercise is for entrepreneurs to wipe their calendars clean and literally plan how to spend every hour of one day. When mechanically planning, it becomes clear that leisure activities take up much less time than anticipated and there are big chunks of time that need to be filled. Owners should think through with whom they want to spend their time, what they actually want to do to exercise their professional talents and where to live.
When it comes to selling a business, the best advice can’t be captured in a macro thought, as every scenario is different. Consulting with additional experts will provide the structure and careful guidance needed to help owners create a purposeful life after a business exit.
Joel J. Guth is the CEO, Founder of Gryphon Financial Partners. Contact a member of our team at 614-929-2880 or firstname.lastname@example.org.