There are many reasons to sell a business.
For many, it may be that the current owner seeks a change of pace or a new opportunity, or maybe it is a financially beneficial move on the part of the owner. Maybe the owner is retiring, the number one reason to sell according to IBBA Market Pulse.
Regardless of why the decision to sell is being considered, there are a number of factors that need to be given careful thought before any documents are signed.
Selling a business is a permanent step; once it’s done, the business is sold and it can’t be reclaimed.
So to help business owners out there make the right choice, here are a few things to consider:
Selling A Business Before Retirement: Consider The Emotional Impact
Retiring can be an emotional time period and one full of uncertainty. Retirees are entering a strange stage in their lives where work is no longer expected of them, and suddenly they have so much more free time. Some become aimless, and others end up returning to work.
This can be especially difficult if one is considering selling their business, too. They’ve invested years of their life into building it, so they might be attached to the company and the people working there. It can be hard to let go, especially when they’re entering retirement.
Business owners should carefully consider their options if they plan on selling and retiring. They can always delegate and still own.
On the flip side, retiring after selling a business can be incredibly liberating. After selling my business in 2011, I choose to retire early shortly thereafter. The freedom to pursue other passions and be 100% present with my family is a huge blessing.
So, just consider the consequences either way!
Consider The Company’s Culture and “Soul”
This ties into the emotions attached to a company, but the idea that the company could change into something else entirely upon sale can be one that gives owners pause. Preserving the “soul” of a company can be important to some owners who want their successor to keep the culture and the image of the company intact.
If a business owner is still looking to sell but is worried about the company changing or losing itself, then they should put all their cards on the table. The owner must tell exactly how the company operates, what its goals and mission statement are, and explain the culture that exists there. Let the potential buyers know exactly what the company stands for. They might decide to change it anyway, but at least an effort was made.
I can assure you that no one will run your business like you. And, if you’re going to sell it, it’s the new owner’s right to change things up.
Bottom line… if you can’t handle someone else running “your” business unlike how you would, then don’t sell it.
Stick Around For a Little While
During the transitional period between owners, offer to stay and help the new owner get used to running the business. Say goodbye to employees, make sure that everyone adapts well, and offer advice and assistance so that the new owner understands how to work in their role.
Selling a business can be an emotionally and mentally draining experience. A business owner needs to make sure that this is what they want and that they have explored all other possibilities. Don’t make a hasty decision.
After my own sale, I stayed with the new company for ~2 years. I helped to transition the clients, employees, and processes to the new owners.
It was certainly an emotional process, especially since the new company didn’t have the same values as I did. But, I was proud that I was 100% transparent to my staff and did everything I could to assist them during the transition. Some stayed, and others left.
There are so many reasons to sell a business, but make sure you take the time to think and feel about the decision.
The same holds true for buying a business.
If you’re truly an entrepreneur, consider starting out small with your own business and see how far you can grow it.
It’s not for everyone, but if it’s for you, it’s a fantastic FIRE strategy that can really accelerate your path to freedom.
If you’d like to know more details about my own business that I started and sold, you can find additional details from my guest post on Financial Samurai.
Readers, what are your thoughts about owning a business? If you do own one (or plan to own), what is your anticipated exit strategy?