The process of selling a business can be an emotional roller coaster. While on one hand you may have a great opportunity to get a big return on investment from a company that you’ve dedicated your life to running. On the other hand, it’s that same dedication and investment that makes it difficult to walk away. Being prepared financially, emotionally and psychologically for life after selling your business is very important and there are several steps and considerations you can take to make sure that you are ready for it.
The Financial Transition
The pending sale of your company may present you with a windfall. You may finally be able to cash in on that unrealized wealth that was tied up in your business, but it doesn’t mean that you do not need to make financial preparations. Will selling the business provide you with enough funds to meet your lifestyle needs? If so, for how long? Selling may give you the funds to start a new venture, or take some time off, but either way it’s important to know what you’re getting yourself into and establish a plan before the sale completes.
Also, meet with a CPA or financial planner to help figure out the tax implications of selling. Maybe selling only part of the business is a smarter financial move if you’re looking to pull some money out and want to lighten the tax burden. Would an asset or stock sale make more sense? A financial planner will also help to advise you on reinvesting to proceeds from a business sale. Medical insurance is also a consideration if it was handled by a company plan, in which case you will have to find a replacement plan.
The Emotional and Psychological Transition
Running a business is often requires unwavering dedication and occupies most of the owner’s time. For many owners, their business is part of who they are. Consequently, selling your business could present you with an identity crisis if you’re not ready for it. Business owners who invest countless hours in running their company could have problems adjusting to having extra free time. Many owners have spent so much of their time running their business that they rarely have time for hobbies and extracurricular activities. The business becomes the biggest thing in their life, and in its absence, something needs to fill the void.
For many soon-to-be-former business owners, some well needed rest and relaxation may be on their mind. Even if you’re planning on starting a new business after selling one, it’s important to take some time off to recharge and contemplate this major change in your life. Will you travel, visit relatives, or become more actively involved in family life? Your initial transition period should be a learning experience where you figure out what is important to you and make plans that match your values and priorities. Learning a new skill or a hobby could be more than just a way to keep yourself busy. It could lead to an exciting new lifestyle change. You’re going to have some new found freedom so take advantage of it by setting aside some time just to grow and work on personal relationships.
Maybe the benefits and life lessons gained from running a company will motivate you to share your knowledge and help other entrepreneurs. Many new businesses are started from the concept of helping others. Just like the financial aspect, it’s a good idea to come up with a few ideas before the sale finalizes. This will improve the chances of a successful transition.
Life goes on after selling your business. Don’t get too caught up in the sale process that you for get to plan for the next stage in your life. Hiring a Business Broker to assist with your sale is not only a smart decision if you want to sell your business quickly and maximize your profits, it also gives you access to an experienced professional that can help you transition to post-sale life. If you need advice or help with a succession plan, contact CIBB and let us help you with the sale process and prepare for what comes after it.