Congratulations! You’ve sold your business. Now what? Such an emphasis is put on selling the business that many entrepreneurs overlook the process of physically exiting a business.
Which means they are in for a shock.
The amount of work needed to physically exit can be substantial, especially if you don’t have a strong exit strategy in place. There are two major categories of exit processes: tactical and emotional/interpersonal.
Here are the breakdowns:
Closing the Entity
Most sales are asset sales. This means that the business entity needs to be closed after the exit. There are several often overlooked elements to the business that need to be addressed prior to being officially closed.
Use this checklist as a guideline:
- Handle final workers comp and general liability insurance audits;
- Complete payroll and sales tax filings;
- Complete state and federal income tax returns;
- Close medical plans;
- Roll 401k and employee benefits;
- Close vendor credit accounts, bank accounts and credit cards.
Businesses are rarely sold for all cash at closing. This means that there is some type of seller financing or possible “earn out” in the sale. In either case, there needs to be a very structured timeline, payment schedule and clear expectations outlined. These need to be strictly followed in order to make sure all the payments are made and on time.
Emotional & Interpersonal
Integration of Cultures
A new business owner or consolidation of two companies is extremely disruptive to the existing business and employees. There will be an adjustment period. A large portion of this will be dedicated to establishing new management styles, reassessing expectations and navigating changes. This will be hard for everyone.
Foundationally, trust and communication channels have to be established. This base will help team members integrate into the new culture.
Your team members are a large factor behind the success of your business. They wake up every morning to come work alongside you in the trenches. Some of them have been doing that for a very long time.
While they may understand why you are leaving, there might be feelings of abandonment and hurt. Particularly those who have been there for a long time will struggle with your exit. Many times they have stayed with the business because they enjoy working with you.
Your current employees are an essential piece to the future success of the business. They will need to be walked through the exit in a way to set the business up for continued success.
Resolving Internal Emotions
Leaving your business will be an emotional process. More so if you have been running it for decades. Many business owners tie their self-worth and personal value to their organization. They derive respect in creating and maintaining the business. Running a business is much more than a paycheck for a business owner.
Leaving will be hard.
Your success after the exit will be tied to discovering something worthwhile and valuable for your time. This varies by individual. Some dedicate time to family, others to travel and others start new businesses. Dedicate time to determining what your life after the exit will look like.
Selling a business is a comprehensive and complicated process. Building a strong foundation going into the exit will make the exiting process much easier. Make sure you have a plan not only for your exit, but navigating the aftermath of the business sale.
We can help you throughout the entire exit process, both building a foundation and the actual exit. Regardless if you are a family business, partnership or entrepreneur looking to move onto the next phase, we help all types of business owners navigate business transitions.