There are no more complex business challenges than selling a business. The final transaction process is a culmination of deep due diligence, back-and-forth negotiation, and legalese like you’ve never seen. Yet, somehow, the transaction itself is not the most challenging aspect of the sale. It might not even rank in the top five. Completing the transaction is relatively straightforward compared to the following:
Defining Your Win
What is your Win? How much is enough? How will the sale support your financial future? These questions are far more loaded than the line items you will encounter in the transaction. Exit planning is synonymous with soul searching, which many business owners don’t have the time to do during the daily grind of running a business. When it first clicks that you might be ready to exit, your entire outlook shifts from simply winning the day to winning at life.
The Emotional Side
The reality is that 80 percent of businesses don’t sell. Not because they aren’t successful, but because most of these businesses unfortunately aren’t transferable—and the ones that are, don’t make it to or through the transaction stage because of emotions. Power, control, and the entrepreneur’s fear and loathing of porch sitting are a few of the common emotional barriers that keep business owners from selling. Owner readiness is the key first step to exit planning, followed by business readiness and market readiness.
The Prep to Get There
Your ideal sale price might not align with fair market value, or what a buyer is willing to pay. Most business owners tend to overestimate the value of their business, in which case they may opt to step back and make improvements to enhance the business until it’s truly worth what they believe and want it to be. This can include assembling a leadership team, modernizing the business, putting systems in place, and scaling to generate more revenue.
The process of making a business more valuable for a sale can take months or even years of incremental improvement and relentless work on the owner’s part. After that, the transaction is more in the hands of professional service providers to execute.
Relationships & Relevance
Your work is in many ways the centerpiece of your life. It’s always on your mind. It’s where you spend most of your time. It affords your lifestyle and helps provide for your family. Over the years, you’ve built rewarding relationships with your customers, suppliers, vendors, and employees. You especially want to make sure your employees are well taken care of in the transaction and transition. Your loyalty and integrity are what make you a successful businessperson, and it can be difficult to accept that your work-based relationships will evolve from you being the business owner to no longer being present in the business. That relevance is sometimes the root of hesitation to sell. It’s also part of the emotional side that is much more taxing than the transaction.
This article started by saying that there is nothing more complex than selling a business. Additionally, there is no other experience like that of selling and exiting a business. It’s not like selling a car, or a boat, or even a house. There’s no comparison that does it justice. By the time you get to the final paperwork, you’ll be focused on sealing your Win and moving on to your next chapter in life.