Selling Your Business? What’s Next?
Success at starting and growing a business doesn’t necessarily mean an owner will be prepared for the next chapter in life when the business is sold.
Business owners commonly report feeling adrift and a loss of purpose and identity following their transition away from the business.
By preparing in advance for life after the sale, an owner can be equipped to launch into this next chapter of life with a greater chance for positive outcomes.
For business owners and entrepreneurs, building your business is a pursuit of passion years in the making. You worked hard, dedicated your time and energy, and planned for the future of your business. Being a business owner is an all-encompassing effort, and it’s easy to forget about what comes after amid the day-to-day of running a business.
Exiting the business you spent so many years building is a big decision, and it comes with equally big changes to your day-to-day life. Whether you’re just starting to think about making your exit or the wheels are already in motion, here are some ways you can start planning for that transition to ensure that your post-exit life is just as fulfilling as running your business.
WHAT TO EXPECT IN YOUR POST-EXIT LIFE
The idea of selling and exiting the business creates a sense of excitement about what might be next. But the sale may also instill a feeling of uneasiness at the uncertainty that follows.
Yet, one thing is certain about the future. All businesses will go through a transition. When that transition does happen, it pushes you into a new chapter of your life — one that comes with new challenges and new opportunities.
Here are some of the most common challenges business owners face when they first enter post-exit life:
MANAGING THE TRANSITION AND FINDINGS SATISFACTION
As a business owner, you had strategies for dealing with any number of challenges facing your business. Many business owners focus on preparing the business for sale but overlook their personal readiness until after the deal is done, often to their detriment.
Now that you’re moving into post-exit life, you will have to confront new challenges and emotions. Here are some strategies you can use to help manage that transition and find true fulfillment in your new life:
DEFINING YOUR PURPOSE
In your life as a business owner, you may not have spent much time thinking about personal goals that weren’t somehow connected to the business, and that’s ok. You had a business to run and metrics to hit, but now that those days are behind you, having clearly defined goals for your post-exit life can help add purpose and direction to your life.
If you are just starting to think about transitioning away from your business, try to take some time now to think about these things if you can, so you can get right to enjoying your life when the transition eventually happens.
Begin thinking about your purpose and how to fill your time before you sell. Entering this next chapter of your life without an idea of how you can spend your time will contribute to you feeling adrift and may ultimately lead to dissatisfaction with your decision to sell.
MANAGE YOUR FINANCIAL SECURITY
For many business owners, the sale of a business will be one of the biggest financial events in their lives. It will also likely mean transitioning from living off what you earned from your work to living off the proceeds of your exit.
Unless you intend to be a serial entrepreneur, you will only sell a business once, and the sales proceeds need to last.
Setting financial goals can also be a helpful place to start. Think through the life you want for yourself and your family now that the business isn’t a part of it. Consider defining your financial priorities and how they fit into your living expenses, income, investments and other assets.
Engage with your financial advisor before you exit your business. Your advisor will be able to help you form a plan for your finances and give you a realistic picture of where you stand. They can also advise you on areas of interest including post-sale liquidity and cash flow, estate planning, charitable giving and your legacy.
FOCUS ON YOUR FAMILY
Exiting the business will naturally impact members of your family as well as yourself.
Some of these impacts will be positive, like having more time to spend together and potentially having the financial resources to live a life you’ve always wanted.
Some impacts will be challenging — exiting the business may mean cutting off an income stream for family members who were receiving income or benefits from the business, and for those who are connected to the business, they may feel the loss of your presence in it.
Coming to terms and adapting to your new family life, and potentially, new family dynamics, can be a challenge. Even simple things like how much time you have together can be a challenge at times.
While you may have been working extraordinarily long hours each week, your spouse built a life of his or her own in your absence. Don’t expect your spouse to drop everything now that you are available.
Including your family members in your plans early on is one way to help manage these challenges. This decision impacts them in many ways, and it’s important to consider them when building your plan. Having those conversations early on in your planning can help alleviate some of these issues when you make your exit for good.
DEFINING YOUR SOCIAL LIFE
Exiting your business can mean having more free time to spend with friends, family and loved ones. It can also mean spending less time with the social connections you made through your work.
If you were working full time, you likely intermingled your work family and your personal life. You may have had more social engagement through work than the personal friends you occasionally saw on the weekends. You will need to invest in expanding your social network and making new friends. This is not always easy in the later stages of life.
Having a picture in your mind of what your social life will look like post-exit is a big way you can avoid feeling adrift. Whether it is golf, playing cards, volunteering, mentoring others or something else entirely, you will need to put yourself out there to reconnect with the friends you didn’t have enough time for in your working days, or meet new people and develop meaningful new relationships.
START PREPARING NOW
Selling a business is a monumental change in your life. Routines and relationships will change, and some of the parts of your life that gave you direction will be gone. Just like running a business, managing your life post-exit requires planning and preparation. Taking steps now to prepare for the day when you leave your business will help ensure that the transition to your new life is as fulfilling as possible.
MANAGING YOUR TIME
Throughout your career, your days had a certain structure. However, without an office to go to and a business to run, that structure will be gone, and you may initially feel like a fish out of water. It is easy to let time slip by.
Consider ways you can introduce some level of structure to your day-to-day routine, whether it’s planning your social life, volunteering regularly or even just setting aside parts of your day for different activities.
In your working life, your schedule may have been so full you never realized just how many hours there are in a day. Filling those hours can be one of the most jarring parts of the transition, but proactively managing your time can help.
Reach out to your Financial Advisor if you are interested in learning more about how City National Rochdale can help.
IMPORTANT INFORMATION
This document is for general information and education only. It is not meant to provide specific tax guidance. The information in this document was compiled by the staff of City National Rochdale (City National) from data and sources believed to be reliable, but City National makes no representation as to the accuracy or completeness of the information. The opinions expressed, together with any estimates or projections given, constitute the judgment of the author as of the date of the presentation. City National has no obligation to update, modify, or amend this document or otherwise notify you in the event any information stated, opinion expressed, matter discussed, estimate, or projection changes or is determined to be inaccurate.
City National, its managed affiliates and subsidiaries, as a matter of policy, do not give tax, accounting, regulatory, or legal advice. Rules in the areas of law, tax, and accounting are subject to change and open to varying interpretations. Any strategies discussed in this document were not intended to be used, and cannot be used for the purpose of avoiding any tax penalties that may be imposed. You should consult with your other advisors on the tax, accounting and legal implications of actions you may take based on any strategies or information presented taking into account your own particular circumstances.
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