One of our closest mentors owned a very successful business that they had grown from nothing. They were getting older and thoughts of “someday” selling were starting to percolate in their minds enough that they would mention it to each other in passing and fun. However, they didn’t believe they were ready and couldn’t even fathom what they needed from it or what they would do after, so they did nothing. They got an offer on their business out of the blue. It was a great offer, but they just weren’t sure, didn’t know what the company was worth, and most importantly, didn’t see a clear reason to take it. Then there was a health event, that luckily everyone survived. They sped up the process for succession planning and realized that their business needed a lot of work to get a value of that first offer. Plus, they had changed their minds and decided that they wanted out sooner rather than later. They did eventually sell, and by anyone’s standards it was a very successful sale. But had they been ready, they could have avoided a lot of hardship and stress.
We like to share this story because we think it epitomizes the business owner mentality. You love your business like a child, especially if you created it, but even if you bought it and grew it. It is part of you and your purpose. It has been a value to you not only financially, but also personally. If you are lucky, you have other parts of your life you are passionate about, but not all business owners do. Even with all of that, there may still be a little voice inside you that is growing that thinks you should start to think about what it would like to sell your business. Maybe that voice wants to get out while the getting is good. Maybe that voice wants top dollar. Maybe that voice wants to protect the legacy of what you have built, including the client relationships and staff. Maybe that voice knows you are going to lose some key people if you don’t start planning for them to take over the ship in some way. Perhaps you just don’t feel like you have what it takes to get from the financial success you already are to the next level- we have heard that one from many business owners who have transitioned out. It’s like letting your child leave the nest because you successfully raised them to your full capability. It could be any and all of these reasons and more. But if you are hearing that voice, don’t wait too long to start preparing yourself and the business.
First, think about yourself. Would you like to slowly transition out or cut and run? What will you do when you are not in the business anymore? What do you need to do to make sure you have plenty to keep you occupied and living with purpose? If you have been hiding in your business for decades, there may be a whole new world out there!
Second, find some mentors who have been there and done that. They don’t necessarily have to be in your industry, but it can help. Talk to people you can trust who have no reason to talk to you other than the fact that you asked nicely (and maybe bought them a meal). Find out what their experiences were and how you can learn from them. This is invaluable advice, especially if you don’t just talk about the technical transition but about their relationships with their spouses, family, community, and what they now do with their time.
Third, start discussing these thoughts with your advisory team and gathering other necessary members of the team, if need be. You don’t want to assemble the team in a crisis. Ideally, you’d have these people together working toward the goal for a while. These are the people who can tell you what you need from the business and what the business may be worth. You can let them know in no uncertain terms you are not in a hurry, but you want to be ready if the opportunity presents itself. This may surprise you, but a therapist may also be a huge help right now. This is a major life change, and talking it out in a healthy manner with someone who can really help you get through the emotions of it can be a wonderful gift to yourself. If you are married, consider your spouse part of your advisory team, please. They don’t have to come to all the meetings, but this is your life partner and upon the sale you are going to be spending a lot more time together. You want them to be in on this!
Next you can start to do some of the basics and clean up of your business that needs to be done. Make sure the books are up to date and consider getting a valuation. Are all the key people in place that would need to be for a sale? Do you need to adjust some of your products, services, or clientele? A good strategic planning session with the appropriate follow up can do wonders here for the day to day before you get ready to sell.
Finally, before you get into any sort of nuts and bolts planning, just go slow and enjoy the blue-sky kind of dreaming that should happen before putting a plan together. Just taking the time to go though these initial steps can be not only a win financially, but also can increase the quality of your life throughout and after the sale.