Every business owner eventually exits their business—by choice, by death, or otherwise. For business owners who choose to exit their businesses, they often confront a challenge as their eventual business-exit date approaches: a sense of grief and loss of identity.
Running a successful business for years and years inevitably becomes a part of your identity. Founding, growing, and maintaining the business’s success become a statement of not just business success but also personal fulfillment.
Even though many business owners understand that their exit is inevitable, they still struggle to confront the emotional side of exiting the business. This is where an Advisor Team can offer added value to business owners approaching their business exits.
Here are some of the most common emotional roadblocks that your Advisor Team could help you overcome on the emotional side of planning a business exit.
What Do I Do Next?
This is one of the biggest questions business owners confront when they begin planning for their eventual business exit. For many business owners, running the business is a huge part of their life. It may even be the most important thing in their life.
For some business owners, after the initial honeymoon phase of not running a business wears off, they find themselves bored, antsy, and under-stimulated. In some cases, these business owners may look for a way to get back into the business, which could have negative consequences for the business itself, the business owner, the business owner’s family, and others.
This is why it is so important to have a long-term plan for what you intend to do after you leave your business.
For example, many business owners travel after they exit their businesses. They have the time and money to do so, so for a year or two they do so. But after they’ve seen everything they want to see, they think that there’s nothing else for them to do. What do they do with all their free time?
An Advisor Team can help you confront this common pitfall long before you exit your business. That’s because your advisors can give you a sense for the time and resources you’ll have available after you exit the business.
For example, say you want to exit your business when you turn 65. An Advisor Team can help you determine how much money you will need from the sale of your business to achieve financial security. Then, based on your lifestyle, your health, and other factors, they can help you determine how long you’ll be able to maintain financial independence after you exit.
That last part is important because many business owners assume that they will not live as long as they actually will after they exit. So, for instance, if you wanted to exit your business at 65 and assumed that you will only live to 75, you might think that you’re safe if you have 10 years of funds built up.
But what happens if you live beyond 75? Would you be willing to go back to work at that age? Would you even be able to? And what if you can’t?
These questions can seem scary, but an Advisor Team can help you confront them early in the process and give yourself enough of a safety net to adjust to unexpected post-exit occurrences.
How Can I Protect My Legacy?
Legacy is important to many business owners. When you eventually exit your business, financial security is likely not the only thing that matters to you. While financial security is the foundation of a successful business exit, many business owners struggle with the idea of achieving financial security in ways that don’t also secure their legacy.
For example, say that you built your business to the point where you can sell it and obtain financial security. But as you take the business on the market, you find that the buyers willing to pay you the most have cultures that don’t align with the culture you built at your company. On the surface, it may seem like you only have two choices:
- Take the money and achieve financial security at the risk of your legacy.
- Preserve your legacy but take less money than you would need to achieve financial security.
Fortunately, in many cases, there are more options that allow you to continue pursuing financial security while preserving your legacy. However, those options will likely be unique to your personal situation.
Because your needs are unique to your situation, it’s important to leverage the expertise and objectivity of an Advisor Team to help you make the best decision in the scenario in which you find yourself. In the example above, your Advisor Team may be able to uncover additional buyers that you hadn’t considered that allow you to sell the business, achieve financial security, and preserve your legacy.
Balancing your financial needs with your aspirational goals can be challenging and complex to do by yourself. An Advisor Team can help you take a clear-eyed look at your situation and help you avoid turning financial needs and aspirational goals into an either/or choice.
There’s Nothing Wrong With Feeling Feelings
In some cases, business owners won’t confront the feelings of grief and loss upon a business exit because they think that there’s something wrong with having those feelings.
Those feelings are valid. Refusing to confront them can cause you to make decisions that have negative impacts on your goals.
For example, if you think it’s weird to feel a sense of grief about selling your business, you may take steps to avoid any discussion about the emotional aspect of selling your business. This may manifest in looking simply for the most money that you can get for your business without any other considerations, because financial security is the foundation of a successful exit.
Now say you follow through on this feeling. You sell your business to the buyer who offered you the most money because it looks like the most rational decision. Six months later, you find that that buyer has laid off 75% of your workforce. Some of the people who got laid off keep in touch with you and share what an awful experience the new ownership was. And despite having financial security, you now have to live with a sense of regret that maybe there was something you could have done to prevent this.
On the other hand, it’s important not to let “what ifs” take control of your planning. Selling a business is complex, and inevitably, things won’t always go as planned. But if you try to dig into everything that could possibly go wrong, it can begin to turn into paralysis by analysis, where you overthink every possible outcome to the point where you cannot make a good decision about your eventual business exit.
In both cases, an Advisor Team can help you level-set what’s most important to you, uncover positive and negative consequences in the ways that you will pursue your needs, and combine your objective needs (e.g., financial security) and aspirational goals (e.g., protecting your employees, establishing a legacy) into a plan that allows you to pursue financial security and sleep better at night about how you did it.
Conclusion
It bears repeating: Feeling a sense of loss or grief as you approach your business exit is normal. How you address those feelings can be the difference between a successful exit and an unfulfilling exit. Your Advisor Team can help you confront these emotions early in the process so that you feel comfortable with how you exit your business.
We strive to help business owners identify and prioritize their objectives with respect to their businesses, their employees, and their families. If you have questions on this topic, we can help with more information or a referral to another experienced professional.