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7 min read.
Taking The First Step: Overcoming the Fear and Uncertainty of Selling Your Business
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Whether you've built it from the ground up or taken it to new levels of success, your business is your baby. It's a part of your life every bit as much as your family. So, when the time comes to exit there are a range of emotions, fears, and so many unknowns it makes taking the first step, the hardest.
So, in this blog, we are going to "say the quiet part out loud" as they say and talk about some of the reasons business owners hesitate or freeze up when it comes time to exit and some strategies to overcome that reluctance.
1. Fear of the Unknown and Loss of Identity
- A "leap of faith": Selling a business means stepping into uncharted territory. Many entrepreneurs' lives are intertwined with their companies, and the prospect of not being "the boss" can create a fear of losing purpose and meaning.
- "Who am I now?": For some, their identity is so closely tied to their business that letting go can feel like losing a part of themselves, leading to a profound sense of emptiness or loss.
- Acknowledge your feelings: It's normal to feel a range of emotions during this transition, including grief and uncertainty.
- Gradually step back from day-to-day operations: Begin delegating tasks and responsibilities, preparing yourself for a life outside the business.
- Explore new purposes and opportunities: Think about what you want to do after the sale. Will it be retirement, new investments, volunteer work, or another entrepreneurial venture?
- Connect with a support network: Seek out fellow business owners who've navigated a similar transition, or consider professional guidance from coaches or therapists specializing in this area.
2. Emotional Attachment and "Seller's Remorse"
- The "baby" you nurtured: Years of hard work, sleepless nights, and sacrifices make it difficult to view the business simply as an asset.
- The regret factor: Many experience seller's remorse after a sale, questioning whether they made the right decision, got the best price, or left the business in the right hands.
- Seek professional valuation: This can help you set realistic expectations for the business's value, avoiding unrealistic demands based on emotional attachment.
- Focus on the future: Remind yourself of the reasons behind the sale and the exciting possibilities that await you.
- Focus on a good fit: Seek out buyers whose values and vision align with yours, ensuring the business is in good hands after the sale.
- Reflect and celebrate your achievements: Acknowledge the hard work and success that went into building the business, allowing for a healthy sense of closure.
3. Worries about Employees and Legacy
- Protecting your people: Business owners often feel a deep responsibility to their employees, and concerns about their future under new ownership can be a significant obstacle to selling.
- Leaving a mark: The desire to preserve the company culture and values, and ensure the business continues to thrive after the sale, can make choosing the right buyer a deeply emotional decision.
How to Overcome:
- Communicate clearly and transparently: Inform your employees about the sale at the appropriate time (ideally when the deal is near completion) to avoid speculation and rumors.
- Be honest and empathetic: Address employee concerns about job security, roles, and potential changes to benefits or company culture.
- Provide support and resources: Offer assistance like job placement or training programs if job losses are inevitable, and facilitate a smooth transition to new ownership.
4. The Challenges of Due Diligence
- Under the microscope: The process of due diligence, where buyers scrutinize every aspect of the business, can feel intrusive and uncomfortable for business owners who are used to being in control.
- "What will they find?": The fear of potential flaws or weaknesses being exposed can add another layer of anxiety to the selling process.
- Prepare thoroughly: Organize all necessary documents and data before the due diligence process begins.
- Be transparent and disclose issues upfront: Honesty builds trust with buyers and can streamline the process.
- Work with an experienced advisor: There are many professionals available to support you, but working on business sales may just be something they do from time to time, not their primary focus. Work with a team with the experience and the competency appropriate for your industry and size.
5. Negotiation Nerves and Financial Fears
- Haggling over your life's work: Negotiating the sale of a business can be fraught with emotional tension. It can feel like a battle over your life's work.
- "Did I get enough?": Doubts about the business valuation and whether the offer is truly the best one can fuel anxiety and regret, especially if a significant portion of the owner's net worth is tied to the business.
How to Overcome:
- Be prepared: Understand the true value of your business and research potential buyers to strengthen your negotiating position.
- Build rapport and focus on interests: Aim for a collaborative approach rather than a combative one during negotiations.
- Find a trusted partner: Engage a deal team that is aligned around your goals and your motivations for sale. For many brokers the goals is getting to the end, but their "end" might not be the end you have in mind. Also, understanding all elements of the sale, like taxes for example. Keep in mind, most brokers get paid on the top line transaction price, not the bottom line after taxes.
- Be prepared to walk away: Don't be afraid to walk away if the terms are not favorable or the buyer is unreasonable.
Ultimately, the key to a successful and lucrative sale lies in taking intentional steps from the outset. By establishing clear, measurable goals at the beginning of the process, you create a roadmap that aligns your interests and objectives for the transaction. Just as importantly, surrounding yourself with the right advisory partner—one who understands you and acts as a true advocate—ensures you are supported through every phase of the sale. This combined approach not only maximizes business value, but also provides peace of mind as you move forward with clarity and purpose into the next stage of your journey.
If you're considering selling or transitioning your business, our team can help. Set up a consultation with our team today.
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