10 Strategies to Minimize the Emotional Toll of Selling Your Business

10 Strategies to Minimize the Emotional Toll of Selling Your Business

 

Running a business is stressful.  Selling a business can be equally daunting.  It’s important to acknowledge and prepare for these changes as a former business owner.  There are several similarities between business owners when dealing with company succession plans. There often isn’t a complete succession plan in place. There’s often not enough time to plan an exit strategy and execute it. Many don’t understand the financial and emotional impact it may have upon the rest of your life.


Here are ten succession planning best practices to better prepare you for this new chapter of life:

Financially Plan As If You’re Winding Down Your Business

Finding a successor to your business is not an easy task. Whether it’s a succession within your family, an employee within your company, or looking at an outside suitor, planning financially for the worst-case scenario will serve you better now and down the road. Coaching business owners who manage as they are winding down their business will prepare you financially for the worst-case scenario. If you can broker a deal for the sale of your business, then this financially will only be considered a bonus. Additionally, the company’s sale price will not need to support you financially in retirement. Therefore, less emotion will be involved in the sale.

 

 Allow Enough Time For It To Become A Reality

Have you considered the financial, emotional, psychological and physical factors that impact the business owner when looking at the succession of one’s business? Allowing enough time to consider all these factors will allow you to adapt to potentially leaving your business over time emotionally.

 

Minimizing Taxes:

Selling your business will likely represent the single largest tax event in your life. Many business owners forget that the government is your silent partner when you sell your business. You want to make sure you qualify for the Lifetime Capital Gains Exemption. In order to be eligible, there are some critical criteria to meet, which require time and organizational awareness. Even after addressing all these factors, you are likely facing a significant capital gains bill. Strongly consider donating to a charity to offsetting the capital gains. 

 

Leaving a Legacy

When you exit your business, have you thought about what kind of legacy you’ll be leaving behind? On the heels of minimizing your tax bill, you could take the opportunity of selling your business as an excellent opportunity to leave an incredible legacy behind. If you choose between writing a colossal cheque to the government or to a cause that you’re passionate about, which one would you choose? It could play a vital role in your current and future tax planning.

Put an Estate Plan Together

Selling your business can represent life-altering changes to your future and your family’s future. Surprisingly, most business owners don’t understand the impact your business’ sale proceeds can have on your financial future. Will you have an abundance of wealth to see you through the rest of your life? What kind of lifestyle can I afford to live in the future? How will you address the taxes owing on your estate? How significant a legacy can you afford to leave? Why not run the numbers through specialized estate planning software and take the guesswork out of your financial future?

A Succession Strategy Doesn’t Mean Doing It Tomorrow: 

Too many business owners reach the point that they’ve hit their breaking point and are ready to pull the parachute. The last-minute plan to exit impacts the business’s selling price, but it doesn’t allow the business to start performing without the business owner at the helm, nor does it allow the business owner to function without the business. A more extended preparation of the business operating without the owner prepares all parts of the business to adapt accordingly. Also, adequate time allows the company to adjust and fill in any holes or voids without the owner.

Align With Your Company’s Business Strategy: 

The eventual exiting of an existing business owner needs to be considered when looking at the company’s long term business strategy. Being too small or large focused will attract or detract from potential buyers. Expanding into different product markets or service offerings will diversify the company’s revenue stream and help to solidify its client base. A more secure client base translates into a higher sticker price.

Prepare the Company To Run Without You: 

Preparing the company to run without you will ease the transition to a new ownership group. It’s essential to take mini-vacations from the business leading up to your exit. Doing so allows employees to get used to you not being there, being more autonomous in decision-making and making you more comfortable that the business can run in your absence.

Consult a Board of Directors, Peer Advisory for Advice: 

If you have a Board of Directors, and if not, consult with an informal Peer Advisory group. It’s important to have conversations about transitioning power, dealing with internal talent and promotions, and addressing potential financial challenges. Also, it’s valuable to access expertise who have been through the sale of a business and leverage their experience.

Make A Serious Commitment To Individual Development: 

You need to ensure that your employee talent pool is also up to the challenge. Investing back into your employees will result in a stable workforce, an ROI that is easily justified, and leave an infrastructure of talent in place that will not miss a beat upon the transition of the business. Taking this step will translate into huge dividends during the sale of the company.

Regardless of your preparedness to go through your business’s succession plan, attention needs to address your financial plan, executive infrastructure, and psychological exit strategy from the business over time. Most importantly, plan for your exit well before the scheduled date.

10 Strategies to Minimize the Emotional Toil of Selling Your Business

 

There are several similarities between business owners when dealing with company succession plans. There often isn’t a complete succession plan in place. There’s often not enough time to plan an exit strategy and execute it. Many don’t understand the financial impact it may have upon the rest of your life.

Here are nine succession planning best practices to start you on your way:

 

Financially Plan As If You’re Winding Down Your Business

Finding a successor to your business is not an easy task. Whether it’s a succession within your family, an employee within your company, or looking at an outside suitor, planning financially for the worst-case scenario will serve you better now and down the road. Coaching business owners who manage as they are winding down their business will prepare you financially for the worst-case scenario. If you can broker a deal for the sale of your business, then this financially will only be considered a bonus. Additionally, the company’s sale price will not need to support you financially in retirement. Therefore, less emotion will be involved in the sale.

 

 Allow Enough Time For It To Become A Reality

Have you considered the financial, emotional, psychological and physical factors that impact the business owner when looking at the succession of one’s business? Allowing enough time to consider all these factors will allow you to adapt to potentially leaving your business over time emotionally.

 

Minimizing Taxes:

Selling your business will likely represent the single largest tax event in your life. Many business owners forget that the government is your silent partner when you sell your business. You want to make sure you qualify for the Lifetime Capital Gains Exemption. In order to be eligible, there are some critical criteria to meet, which require time and organizational awareness. Even after addressing all these factors, you are likely facing a significant capital gains bill. Strongly consider donating to a charity to offsetting the capital gains.  

 

Leaving a Legacy

When you exit your business, have you thought about what kind of legacy you’ll be leaving behind? On the heels of minimizing your tax bill, you could take the opportunity of selling your business as an excellent opportunity to leave an incredible legacy behind. If you choose between writing a colossal cheque to the government or to a cause that you’re passionate about, which one would you choose? It could play a vital role in your current and future tax planning.

 

Put an Estate Plan Together

Selling your business can represent life-altering changes to your future and your family’s future. Surprisingly, most business owners don’t understand the impact your business’ sale proceeds can have on your financial future. Will you have an abundance of wealth to see you through the rest of your life? What kind of lifestyle can I afford to live in the future? How will you address the taxes owing on your estate? How significant a legacy can you afford to leave? Why not run the numbers through specialized estate planning software and take the guesswork out of your financial future?

 

A Succession Strategy Doesn’t Mean Doing It Tomorrow: 

Too many business owners reach the point that they’ve hit their breaking point and are ready to pull the parachute. The last-minute plan to exit impacts the business’s selling price, but it doesn’t allow the business to start performing without the business owner at the helm, nor does it allow the business owner to function without the business. A more extended preparation of the business operating without the owner prepares all parts of the business to adapt accordingly. Also, adequate time allows the company to adjust and fill in any holes or voids without the owner.

 

Align With Your Company’s Business Strategy: 

The eventual exiting of an existing business owner needs to be considered when looking at the company’s long term business strategy. Being too small or large focused will attract or detract from potential buyers. Expanding into different product markets or service offerings will diversify the company’s revenue stream and help to solidify its client base. A more secure client base translates into a higher sticker price.

 

Prepare the Company To Run Without You: 

Preparing the company to run without you will ease the transition to a new ownership group. It’s essential to take mini-vacations from the business leading up to your exit. Doing so allows employees to get used to you not being there, being more autonomous in decision-making and making you more comfortable that the business can run in your absence.

 

Consult a Board of Directors, Peer Advisory for Advice: 

If you have a Board of Directors, and if not, consult with an informal Peer Advisory group. It’s important to have conversations about transitioning power, dealing with internal talent and promotions, and addressing potential financial challenges. Also, it’s valuable to access expertise who have been through the sale of a business and leverage their experience.

 

Make A Serious Commitment To Individual Development: 

You need to ensure that your employee talent pool is also up to the challenge. Investing back into your employees will result in a stable workforce, an ROI that is easily justified, and leave an infrastructure of talent in place that will not miss a beat upon the transition of the business. Taking this step will translate into huge dividends during the sale of the company.

Regardless of your preparedness to go through your business’s succession plan, attention needs to address your financial plan, executive infrastructure, and psychological exit strategy from the business over time. Most importantly, plan for your exit well before the scheduled date.