You’ve built your family business from the ground up.
Eat, slept and dreamt your business. But now it’s time to move on. The decision to sell can be the result of many factors, but often there are two key reasons that families will consider selling a business.
- All businesses have a lifecycle. What made sense years ago may not be working now – whether that‘s because of changes in technology, management, scale or increasing competition.
- Families change. While a parent or grandparent may have had a passion for the business, future generations may not share that same drive and might be unwilling to carry on supporting the business as owners.
But even when the sale of your business makes complete sense, getting used to the idea of letting go may be the hardest thing you’ll do. While you may initially feel excitement, exhilaration and pride, be prepared for some emotions you may not expect.
Andrew, age 51, recalls how he felt after the downsizing and sale of the family farm.
“I felt a sense of relief, a weight off my shoulders so to speak, but I also questioned if I did the right thing. Did I steal an opportunity from my children or future generations? Were there different ways it could have been done? I guess you could say seeds of doubt and guilt were juxtaposed with feelings of relief and satisfaction.”
These emotions are unavoidable. After years of involvement in your business, suddenly being without it may bring about feelings of regret and uncertainty, fear and second-guessing. Some people may even experience a loss of identity and community. Your identity may have been intertwined with your business for many years; finding yourself beyond your business takes time and planning.
4 tips to help plan for the next stage of your life
Start by thinking about what you want to do after you sell the business. What will your life look like immediately after the sale? One year later? 5 years later? Think about both what you’ll do with your time and your money.
“Take time to reflect, while having a plan to move forward”, advises Andrew. “If it’s retirement, have something to retire to. If it’s a change of pace or career change, include those thoughts as part of the process.”
More than just identifying your goals and objectives for the next stage of your life, think about your purpose and motivation. With financial freedom and without the constraints of your business, what will get you up in the morning and give you something to look forward to?
Learn from others in your network who have been through a similar experience. Ask them about what they learned or wish they had known. Or consider working with a mentor or coach; someone who has gone through the process or helped others through it.
In Andrew’s case, discussing his plans with family and others helped him get clarity on his decision.
“I first shared with my father my ideas and reasons for the change in direction,” he says, “and I was able to get his blessing. My path forward wasn’t hinged on that, but it was comforting. I looked at it [the sale] objectively during the process, and I discussed it with my accountant, financial advisor and my wife.”
Collaborating with your advisor to create a financial plan can help ensure your goals and objectives for life after your business are achievable and give you confidence that you can lead the lifestyle you want.
Although it can be tempting to make a completely fresh start (moving to a new country or buying a new home for example) as you look ahead to the next stage of life, selling your business is a significant life change in itself. It’s best to give yourself 6-12 months to adapt to life after the sale of your business before you consider other significant life changes.
We’ve all heard of “seller’s remorse”- the feeling of sadness or regret after selling something that is emotionally important to the seller. But having good reasons to sell, building a plan for a rich and rewarding life after your business, and working with a financial advisor to ensure your financial security will help you anticipate seller’s remorse, rather than dealing with it after the fact.
Selling a business isn’t just a financial transaction, it’s a life-changing event.
Contact a Richardson Wealth Investment Advisor to get the best financial advice on your exit plan and future roadmap.