Specializes in governance, strategy, finance and M&A. Author & Experienced Outside Director. Kona Advisors LLC.
Entrepreneurs and business owners typically spend decades building their businesses. They are focused on the future, without a timeline for when they might arrive at their destination. At some point, most businesses get sold. The sale process forces the leadership into the next stage of life.
Despite whatever degree of success you achieved with your business, it does not mean you may be prepared for your new life after selling your business. The things you did to achieve business success do not necessarily prepare you for the next stage of life.
If the goal is to be happy and have no regrets, how do you get there? What preparations should you make before selling to achieve these new goals? What can go wrong if you don’t prepare for what lies ahead?
For the typical business owner, your business is “your baby.” Your life may have been defined by the business and you might even be identified by your job title. If your business frames your view of the world, letting go of it can be hard.
The idea of selling the business, and leaving it, can create both a sense of excitement, and maybe a fear or sadness of what follows. For many owners, their business family is as much a part of their lives as their real family. So how can you prepare yourself before selling to avoid feeling like you’ve lost a part of yourself?
When I sold my family business, I went through this process. At the time, I didn’t understand what was happening. Years later, having seen this happen many times, it makes sense. After I finished my transition, I developed recommendations, which I share here and with clients:
1. Find your purpose. If you plan to move from full-time engagement to full retirement, then you are going to need to fill 50-80 hours per week with meaningful activity. Even if you have already started to slow down, there is likely time to fill.
You should set goals for the next phase of life that align with what makes you happy and avoids what makes you fearful. This likely requires thoughtful introspection, and experimentation to get to know yourself better. Allow yourself the time to try new things, evaluate them honestly and learn from failures.
2. Manage your financial security. Hopefully the sale of the business provides you with ample financial security since you will only sell it once and need to make the money last. Consider your generational and philanthropic goals so they are fully incorporated into your financial plan.
The 3% rule suggests that you can withdraw 3% of a well-diversified investment portfolio, per year, without reducing the corpus. While this has a number of assumptions, it has stood the test of time. Your financial advisor should have the software to run this analysis for you.
3. Invest in family cohesion. Exiting the business can impact each of your family members, in addition to yourself. I find a common response from spouses is “For better or worse, but not for lunch!” While you are working 50-80 hours per week, your spouse may have built their own life in your absence. Don’t expect them to drop everything once you are available. And what about the kids and grandkids?
The first step, which may be the hardest, is to talk about any issues, and what will change. Sometimes facilitation, or therapy, may be needed to advance the discussion. Stay focused on dealing with the issues, and ignore the strife of the moment.
4. Develop a new social structure. If you are working full time, you likely have some form of a dividing line between your work family and your personal life. You may also have more social engagement through work than the friends you see only on the weekends. To ensure that you’re ready once you’ve sold your business, you should invest in expanding your social network and making new friends. No matter the activity, you can “put yourself out there” to meet and develop new meaningful relationships. But this may take time.
In practical terms, this means attending events, or creating social engagements, that you likely would have shied away from in the past. Work a little harder to have a conversation with a stranger. Ask others what they do that is interesting to them. You don’t need to invent the future, but you can learn from others and adapt their suggestions to your preferences.
5. Manage your time proactively. It is easy to let time slip by. Consider creating structure to your days and months, tying back to your new purpose. Unlike work, there are fewer good KPIs to measure your progress.
Keep a calendar of your activities and where the time goes, and assess it. How much time is used to create joy, versus just filling gaps in your schedule? From this, what should you prioritize going forward, or do you need to look for more, and more interesting, things to do?
Advice I’ve received includes spending time to get to know yourself first, figuring out what is fun for you and what makes you fearful and accepting that you may not have the control you once did. “Managing your new life is your job, treat it with the same intent of your last job” is another common phrase. “Give yourself permission to experiment” and “Friends and family matter most,” are things I hear often.
I find that everyone travels a different path, especially after a major event like selling a business. You have a lifetime of experiences that creates your point of view, and biases. Sometimes you will need to challenge yourself to select the best path forward. But this is not a journey that you need to take alone, or that you can’t get help with. As with many things in life, planning and preparation are the key to getting to where you want to go. Remember, the goal is to have no regrets.
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