The time has come. All the years of hard work and sacrifice have finally taken you down the path to selling your business. Perhaps you’re handing the reins to a younger generation and looking at retirement, or you’re mid-career, selling off your ownership stake in order to get you to the next phase of your life. Whatever your situation, planning for your Second Act takes internal reflection, a realistic look at the numbers, and careful consideration of how you can achieve your goals. In this article, we’ll walk you through a common journey we take with our clients, considering that each business is unique in its circumstances.
The Big Question: How Do You Fund The Next Chapter?
Nobody wakes up one morning and says, “I think I’ll sell my business today.” It’s an intentional decision that comes from time spent analyzing and soul searching all the possible paths you could take. You have conversations and you explore your opportunities. Many of our clients want to be “work optional” after the sell – and they’re engaged in their communities, they’re philanthropic, and they’re working on their next big idea.
Before you decide to sell, ask yourself two questions:
- What do I want to do with this next step in my life?
- How will I fund these endeavors?
We recommend starting with the end in mind. Establish your goals and work with your advisor to compare the numbers. Is there a timeframe that you want to work from to achieve your goals? Can you afford to sell your business today or should you consider an alternate path in the short term? What do you need to maintain your current lifestyle?
One area to focus on to answer these questions would be to figure out the best option for selling your business. Are you selling to your children or family members? Are you handing the business off to successors within the business or are you selling to an outside buyer? Sometimes the right choice might not be obvious, and we recommend talking to professionals, your peers, and of course, those close to you who may be taking over the reins. Ask for references from outside buyers. Each step you take along the way can inform and influence you on the best approach to take, and mapping out the potential outcomes in each of these scenarios can help you determine what you’ll need to make the best decision.
During this process, you should explore multiple options, as owning and then selling a business is life changing and irreversible. It’s important to remind yourself that even though the act of selling a business is a transaction, businesses themselves are not about spreadsheets. They’re about people. Businesses take an immense amount of time to run, they cost money, and they can be emotionally demanding. Just remember that your decision involves you, your family, your employees, your customers and your vendors. You owe it to yourself to explore every avenue and ask every question before taking the next step.
Your Financial Advisor: An Unbiased Partner And Team Captain
One big question we get often when a business owner is considering selling is, “How can my advisor help me during this process?” Many of our advisors are also former or current business owners and entrepreneurs. We’ve been where you are and asked ourselves the same questions, staying up late into the night wondering how to best manage these life transitions.
Working with a financial advisor means aligning what you need with what you want, while minimizing regret and avoiding questions like, “Did I sell too soon? Did I make enough in this transaction?” Anytime an owner decides to sell, there are certainties that are anticipated and expected: a certain amount of money or more free time, perhaps. An advisor can tell you what you need to fulfill that next chapter in your life without rose-colored glasses. Sometimes business owners sacrifice personal goals for business goals, and an advisor can set up your finances in a way so that they are tied back to what you really want in life. They can also put you in touch with other key advisors – tax planners, attorneys, even business valuation professionals – and serve as your team captain.
The Safest Bet Is On Yourself.
Many owners have most of their money in their business and they’ve spent years building something from the ground up. You know what you’re capable of, and how hard you’ve worked to achieve and maintain success. You’ve led the charge and you’ve rolled up your sleeves. Because of that, we often say to our clients that the safest bet is on yourself. And having the right advisor on your side means leaning on a partner who is just as concerned about your family’s future as they are about making the numbers match up. Though this transition is temporary, the outcome will certainly affect your future. Believing in yourself and having the right people around you got you to where you are today. Selling a business is no different. All it takes is a little faith, a good plan, and having the right people in your corner.
The advisors at Private Ocean brings decades of business ownership and leadership experience and can help you create a strategy – or refine an existing one and execute it with acumen. Contact us today for a consultation.