As a business owner, you have a company that is yours. You put your time, talents and treasures into the creation and growth of your company, often at the expense of other priorities in your life. The commitment to your business feels very much like the commitment of raising a child. The business is your “baby”.
Business start-up experts will advise you to start your business with an exit strategy as a goal. After all, everyone has a price! This provides you with a path toward a very large liquidity event as the reward for your risk and a payoff for your hard work and dedication. Although the years leading up to the sale of your business may be far from sudden, a business owner does experience sudden wealth. The money tied up in their business shifts to money now sitting in their personal bank account. Mission accomplished, right?
The sale of a business is often the end of a major accomplishment, and the start of a new challenge. For some, selling their baby means giving up the title of business owner. In exchange for financial security, some former business owners experience a loss of identity. The emotional challenges in these types of sudden wealth cases may loom larger than the financial challenges.
With that in mind, here are three key non-financial tips for a healthy “post sale” lifestyle.
1. Maintain your network of colleagues, associations and friends.
2. Take time to enjoy your success before tackling your next big project.
3. Be prepared to move forward on a path, and not act impulsively on emotions.
Having your “team” in place before your sudden wealth event is a critical step. Your team should include wealth management who understand and regularly deal with sudden wealth clients, legal advisory, tax and accounting advisory, and even a therapist to help you through the emotional challenges that will occur. Most people are surprised by the level of influence that can be provided by the right team before, during and after a sudden wealth event.
In the sale of your business, having your team in place early will help ensure your best interests. The right team will help you consider not only your financial future, but your health, stress, lifestyle and personal life, as well.
Before The Sale
Your team can help you prepare to let your baby go, and agree to the sale. Because your company is your identity, some owners unknowingly sabotage any deal because they don’t want the emotional loss that comes with the sale. Your team can help you develop a plan in advance, including legal, financial and investment support, so that you can reach your goals.
During The Sale
Your team can provide coaching to help you close the deal. Selling a business can be complicated. Having the right team in place helps ensure that time is well spent and the transaction moves forward. When your baby is being bought by others, you need to understand what their needs are, and that they may care more about financial performance than the history of how you spent sleepless nights working at your kitchen table to build the company into what it is today. Your story is important to you. It’s yours forever. Realize, however, that the purchaser may have different goals than you have with your business. You birthed it and raised it. Now, it’s time to let it go.
After The Sale
Your team can help you understand the financial implications of closing the deal. This is critical to avoid letting your emotions take over. The sale of your business is a good financial deal, but may create emotional challenges. Because some business owners lose their identity with the sale of their business, they may want to reinvest in something else right away. Results are not always repeatable, and often take time, if they happen at all. Your team will remind you of the financial implications, help you make choices with positive long-term outcomes, and walk away with the lifestyle you want. Learn to enjoy your success.
Creating, building and selling a business can be a part of the American Dream. Freedom, independence and wealth are admirable goals. Recognizing the challenges that come along with achieving those goals is important to maintaining your financial and emotional security. Have your team in place to support you. Talk with your team in advance of your sale, and let them help guide you. Remember the reason for the sale of your business, and stay focused on your new direction.
Sudden wealth happens. Are you ready?
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