Between the terms, price, paperwork, negotiation and time, there are many potential roadblocks that can detour a seemingly smooth transaction between a business owner and buyer. That said, the most common sticking point might surprise you…
Regret, fear of change, concern over retirement, and the lingering question of, “What will I do now?” tend to set in for the seller. Meanwhile, the qualifiers for selling a business are pretty straightforward. Buyers look at the revenue, net profit, personnel and other indicators of a healthy business. Most are simply seeking a good investment for their time and money. And at the end of the day, the sale boils down to a willing buyer and transferable business.
Selling a business is emotionally taxing. Many deals go astray when sellers have second thoughts or are concerned about what they will be doing next. They often find other issues with the deal—“The price is too low,” “I don’t trust the buyer,” “I don’t like this term,” etc.—however, the real issue is that they are not comfortable with any combination of what they will do after the sale, giving up control, or not feeling needed. Planning for the emotional side of the exit means you need some quiet time to reflect. The more confident and clear you are on what is next, the smoother the process will be.
One of the simplest bits of advice we can give is to have a plan. From our previous article:
“And remember, your plan involves other people who need to be aware and onboard. Selling your business to key employees? Confirm they want to stay and lead after you leave. Passing it down to family members? Make sure they truly want to continue operating the business instead of going their own route.”
Planning your exit will help you identify what it is you want in your next chapter, whether it’s starting a new business, contributing to causes that keep you feeling fulfilled or, dare we say, retiring. If you don’t have a plan, your exit is relegated to a wish or dream. See the difference between the three.
We mentioned personnel as one of the top qualifiers for selling your business. By that, we particularly mean management. Remember that a transferable business typically requires a senior leadership team besides the owner. You need (and buyers want to see) people who can continue the business’ success after your exit. Build your team not just to increase the value of your business, but also to learn how to step back and refrain from being at the center of every decision. This shows that the company is not solely dependent on you, and also gives you more free time to start enjoying other interests. Letting go of control can be a business owner’s problem—and that leads us to our next recommendation, which you’re going to love.
Book a trip, and a long one at that. Two weeks, three weeks…make it a month. Prep your team, set your autoresponder and let your company run without you. In addition to breaking out of the lifestyle business mindset, you’ll see how capable your staff really is. In this article, we explain:
“Things will likely fall through the cracks. It’s okay. The bigger test is whether or not you have people who are confident in being decision makers. You might find that you have VPs who aren’t comfortable being Ps, or that your org chart is more like a wagon wheel with you at the center and everyone else revolving around your decisions. Let’s find out who can rise to the occasion of running your business.”
It’ll be challenging for everyone, including you, but trust us when we say that it’s the best first step to selling. Come on, do we really have to beg you to take a vacation?
Your month on the Amalfi Coast—or wherever your dream vacation may be—will give you the practice run you need in order to determine that yes, you are ready to sell, now. Meanwhile, the plan you have set in place will squash the qualms and questions that inevitably arise in the midst of a major life transition. Are you exit-ready all around? Read our three-part series on what exit readiness means:
Rather get right to it? Contact Exit Consulting Group for a guided exit assessment.