It behoves a smart business owner who is planning the end of his/her relationship with a business started long ago, to think not only about the sale of their business and how to best go about it, but also about his/her personal and family reaction to the sale when it occurs.
This can be a very emotional time for a person who has poured their heart and soul into turning a business into a thriving success. Getting all of the ducks lined up in a row includes more than just financial preparedness. It includes emotional readiness, as well. For someone who has worked hard at building something as important as a small to medium-sized business (SME), this is a major life change.
Many SME business owners are so thoroughly tied up in the running of their business that the business is fully dependent on their productivity. This could be brought on by a fear of delegation or by an overly controlling nature. On a personal level, this is rewarding for some business owners. But on another level, it can be one of the worst things for a business.
Being completely reliant on the contributions of one individual makes the business vulnerable. Potential buyers do not like seeing this, as it translates into far greater perceived risk for a future without that key individual. They prefer a business environment that has multiple well-trained individual competent at performing the needed task to keep the business running.
But for owners who have stuck with such a one-person emphasis, the exit from business life can be even more strikingly difficult, with far greater separation anxiety as a result.
The concept of exit readiness deals with this factor. How ready are you for this major life transition? How will it affect your perception of your own credibility and self-worth?
An important part of the succession planning process involves evaluating and promoting your readiness and understanding your longer-term goals for the rest of your life. After as much as two years of exit planning and business preparation for this, it would definitely be counter-productive to back out of the sale at the last minute because you were not ready.
This is why a comprehensive succession plan is important. Structure your plan to include discussion and preparation for your ultimate legacy, discussing exit options, expenses in retirement, and lifestyle transitions. Plan for alleviating your last minute fears with a thorough discussion of your personal finances and tax plan, your personal goals, passion, and motivations.
A professional business exit adviser can guide you and assess your readiness for this major life transition. As advocates, we prepare you for it and walk you through the many concerns and possible outcomes. Chat to us - with the experience of having done this before, we stand ready to help you negotiate one of the most important of life’s obstacle courses.