Exiting Your Business Happily Requires a Strong Personal Vision
A survey conducted among business owners, find that approximately 75% of owners who exit their business are unhappy with the decision one year later. There are several reasons for this, and some owners struggle more than others, but the main reason for unhappiness after a business exit is due to a lack of “personal vision.” They didn’t envision what will their life would entail after the exit. What would be their new higher purpose (beyond golf)? What are their new areas of personal growth? If they thrive on working with a team towards a common cause in the organization, how will they replace it? What are other passions outside of the business that they could enjoyably and consistently pursue with significant satisfaction? These are some the questions that need to be asked and addressed to increase the likelihood of a happy exit.
Exiting a business is probably the single most important decision an owner will make.
Planning for an exit is critical for maximizing the selling price, ensuring the company’s survival after the owner is gone, and leaving in the most tax-efficient manner; these are all important attributes. But if a business owner does not clearly understand what life consists of after their exit, and doesn’t embrace a new lifestyle, he or she will likely put off the transitioning altogether. And doing so could jeopardize the value and survival of the business.
So how does the business owner develop their personal vision for life after an exit? Start by working with a skilled exit planning advisor who has the tools available to walk the owner through this planning process. As an exit planning advisor, I have a number of tools and processes that help create a gameplan for owners. But generally, a good place to start is by working together to drill down very specific answers to these questions. And it helps owners significantly if a plan is in place years before the goal exit date.
Here are some of questions we could cover during our conversation:
- When would you like to be free of day-to-day responsibilities?
- If funding for your retirement requires selling the company, whether it is done internally or externally, when do you expect to receive the proceeds? What do believe is company’s current value?
- If your company was running the way you wanted it to, what would your role look like? How many days and hours would you work? How many vacation days would you like? This is a transition-related question.
- After you exit your business, what material assets would you desire (home, vacation home, cars, boats, etc.)?
- Epic travel after the exit: where do you wish to travel, for what purpose, when and for how long? Costs?
- What is your ideal monthly income after the exit? Determine costs to cover essentials, travel, hobbies, sports, charity, community, family, etc.
- How will you spend your days after your exit?
- A good planning exercise is to determine how much time will be filled by the desires and causes mentioned above, and anything else. Will it equate to a filled week?
As mentioned, a business owner’s life after an exit needs to be filled with purpose-driven causes, activities and efforts within their passions. There are only so many days that one can go golfing and relax. Life needs to be filled other meaningful tasks to have a sustainably happy life after exiting.
Many owners thoroughly enjoy serving in a leadership role within their organization.
- Is it important to the owner (and life-satisfying) to continue to serve in a leadership role after the exit? If so, what are the possibilities?
- What truly motivates the owner when they get up in the morning? It could be a community or societal cause or building relationships with the family and/or community.
- Do I want to work on efforts and causes to support and grow my faith?
Another area to consider is the capital needed to accommodate a new lifestyle, minus already-accumulated capital. This helps determine how much the owner needs from the sale of the business then is compared to the actual business valuation. This formula reveals how much the business value may need grow and determine a reasonable timeline to meet these goals.
Considerations for larger businesses: generational wealth.
For businesses and estates of larger significance, generating substantial liquid proceeds from the sale of a business requires more attention to preserve the owner’s family wealth for generations. Applying the family wealth in a way that helps promote healthy, responsible thriving family members, and helps build their purpose is the ultimate goal. Not addressing significant family wealth outside of traditional means of inheritance, can set the family up for emotional hardships, lack of motivation, dysfunctions, conflicts, etc. for the business owners’ future generations.
The nature of the owner’s inner-world to determine a happy business exit.
More than four decades of research has demonstrated that successful low to mid-market owners have distinct psychological attributes necessary for fostering their success. Unfortunately, these same attributes often lead to cognitive and emotional leadership struggles that owners may not easily identify. However, symptoms of the challenges are often readily identified through the business decisions they do (or don’t) make. While a small percentage of owners handle the exit phase of the business exceptionally well, many experience internal struggles, and a few find these planning struggles impossible to overcome.
Fortunately, there are skilled experts specifically trained to help. Our friends own a consulting company, Orange Kiwi out of Orange County, California (www.orangekiwillc.com), that specializes in this area. The Founders of Orange Kiwi, Allie Taylor, who holds a PhD. in Business Psychology, along with her husband, Andrew Taylor, have develop a solid framework and helpful tools to help owners gain control of their exit to live a life of satisfaction and significance beyond their role in the business.
Just like Orange Kiwi, Zeller Kern maintains a database of resources available to our clients to help with a successful business transition and exit on their terms.
Exiting a business is a very significant event for most owners.
Recognizing the significance and the importance of a business exit in the exit planning process, and doing so years in advance, creates a healthy, meaningful, happy life, after the exit occurs.
I hope you find this article useful. If you have any questions on this subject, feel free to contact me at firstname.lastname@example.org.