Selling your business can bring about a whole range of emotions, from ecstasy to complete disappointment. Many business owners go through the process not knowing exactly what they want out of leaving the business. Similarly, many business owners cling on to their business despite knowing deep down it’s the right thing to do taking a step back.
One of the first things that is imperative to consider when selling your business, is correctly valuing it. Fortunately, we’ve got you covered with our expert Business Valuation Calculator. This will give you an accurate estimate as to how you can properly start planning for leaving the business. It’s important to then plan accordingly for the next stages and how it will affect you personally.
We spoke to one of our clients who has recently stepped away from his business about his reasons to step away, how difficult it is in terms of adjustment, and what advice he’d give to likeminded business owners considering stepping back…
What were the reasons you decided to take a step away from the day to day running of the business?
It was always my plan, to build a business and a team capable of running it, so that it could operate without me. In my opinion, that’s how a business should operate. Business owners who have built a business wherein everything revolves and is reliant around them, have really bought themselves a job. For most it’s a poor paying job where they’re overworked. The stresses and responsibilities of this is something I never wanted. I made sure I had quality team members around me who could grow the business without my constant input.
It’s easy to say, but life is too short and there is more to life than working. Once I had achieved my goals, even with me continuously moving the goal posts, I just knew enough was enough.
When did you decide that you wanted to take a step back and was the overall process smooth sailing?
I had set the process in motion from the moment I set the business up. It was a continuous thing, where we developed systems, processes, and a management team to ensure that the business operated without my involvement.
My taking a step back was an ongoing process, and all part of the long-term plan. As the management team stepped up, I gradually withdrew myself from the business for some time. When the time came where I officially took the step back, there wasn’t a major change or disruption. This was all down to the planning and logistics of it.
Was it difficult leaving something that you built from its foundations, especially in terms of the lifestyle adjustment? How did you combat this?
Over the last few years, I had become more detached from the business, so it didn’t really affect me. This is especially so as I still presently have some ongoing involvement in the business on a consultancy basis. I understand that lots of business owners have a problem ‘letting go of the baby’ so to speak. It was very fortunate for me in knowing it was already placed in safe hands, so I didn’t have these concerns.
I have always had strong interests and hobbies outside of work. It’s been great being able to spend more time honing them over the previous few years. The lifestyle change for me wasn’t that huge, although my wife and family may disagree with me there!
Do you believe the mental health effects of business owners leaving their businesses is understated? If so, what can be done to help support these people?
I guess it all depends on the reason why they are leaving the business. If its enforced, then the likelihood is there will be issues. I believe that a high percentage of sales fall through at the final hurdle, mostly down to due diligence. As well as this, it’s very common when the business owner decides he would rather continue running the business than selling it. That ‘letting go of the baby’ can understandably be a difficult process for many people.
Also, a big factor is once the business has been sold, it’s a case of living off the wealth created to that point. Without wanting to appear negative, no one knows how many more years they have left on the planet. It can be scary to see the wealth being reduced monthly and worrying whether there will be enough.
Years ago, I employed a specialist who calculated what the magic number is. This was a figure detailing how much money you need to live the rest of your life, together with family members and events such as weddings, holidays, illnesses, etc. For me, it confirmed the figure that I had already calculated and reduced my stress about when enough was enough. Being entrepreneurial, I then increased the target I was aiming for, a number of times just to make sure. There is always going to be some stresses around such a huge change, as in all aspects of life. The important thing was to stick to the designated plan and do my research.
What advice would you give to business owners toying with the idea of leaving their business in similar circumstances to yourself?
Generally, the sale of a business needs careful planning and preparation. This is to make it as easy and as seamless as possible for someone to buy the business.
I have seen lots of friends build a business, but then struggle to sell it. This is because they don’t have the right systems, processes, and hierarchy in place. It becomes more difficult to sell a business if it’s totally dependent on the existing business owner. Whereas having a great management infrastructure and reporting systems in place, definitely makes it easier.
I have also seen friends who have received good offers to sell their business, but not want to sell it. They’ve decided that they love working and building their business more than the thought of having free time. You need to let this ruminate with yourself and keep asking yourself the question of what you really want in life. When you have the definitive answer to this, you can start the respective process.
We hope this has outlined to you an insight into selling your business. If you’d like to know any further information on anything mentioned, or anything accounting related for that matter, please do not hesitate to get in contact with us at Nordens, where one of our trusted advisors would be happy talking you through your query.