You’ve heard of buyer’s remorse and maybe even experienced it. Buyer’s remorse is a feeling of regret after making a purchase. It only stands to reason that seller’s remorse is a thing, too.
Some business owners become stressed before the closing as the personal implications of the sale of their business start to sink in. They often delay the sale or even back out entirely. This may be due to anxiety at the thought of major life changes after devoting so much time to their business.
After being business owners for many years, many owners are initially relieved to retire. They may have dreams of traveling, spending time with grandchildren, fishing, reading, learning a new hobby, and every other kind of cliché retirement activity you can imagine. And, in theory, this is a great plan. You have worked hard all your life; now it’s time to slow down and relax.
A year or less into retirement, most entrepreneurs end up looking for something else to do with their time. Many business owners even return with a desire to play a role in their former business. This is an ideal opportunity for the buyer. The buyer should sit down with the seller and ask what areas of the business they most enjoy working on, then align their interests with the activities that provide the most value to the seller.
Often, the seller’s emotional needs are just as important as their financial needs. Keep this in mind during the transaction. The seller may experience periods of last-minute anxiety. Addressing these needs helps ensure a smoother sale and often garners more cooperation from the seller, both during the transition and after.
Here at Morgan & Westfield, we can’t write prescriptions for Valium but we can offer sound and drug-free advice on how to deal with the anxieties associated with the selling of a business…
Find a New Passion
As we discuss the details of finalizing the sale, we have had several clients ask us, “Now, what?” Then, when the sale is complete, and they are officially “retired,” they go off to do all the glorious things they imagined. The hitch is that most will not spend the rest of their lives traveling or playing with the grandkids.
Most entrepreneurs are go-getters. They need something to do with their time, be it a hobby, a new job, a role in a charitable organization, or something that will give them a purpose. Once their business is sold, some entrepreneurs find that what they once thought would be their dream of retirement turns out to be the very thing they resent. A year or less into retirement many of our clients even come back asking to play a role in their old business.
Another issue is that some entrepreneurs become so stressed during the closing — because they realize they will have nothing to do once the business sells — that they often delay the sale or even back out entirely. This is because of the anxiety they get at the thought of doing “nothing” after a lifetime of work.
Luckily, there are ways to calm your nerves when selling your business. You need to realize that what happens after you sell your business needs to be planned just as much as the sale itself. You would not sell your house without knowing where you would be moving next. The same principle applies here: Why would you sell your business without having a detailed plan about what you will do next? Answering “I will be retired” is not enough. You need to direct your energy toward a new passion.
If you are preparing to sell your business and are not sure what you will do next or you plan to just retire, I challenge you to spend some time answering this question: “What do I want to accomplish over the next 5, 10, 15 years?”
Writing down your short-term goals (e.g., traveling or visiting family) as well as your long-term goals (e.g., learning a new language or starting a not-for-profit undertaking) will help you feel less overwhelmed as you get closer to selling your business. You can even gather information now about the different things you would like to accomplish once your business is sold. The more detailed your plan after the business sells, the better. You will find that a little preparation now will save you stress and anxiety about your future as you navigate through the complex process of selling your business.
Aligning the Sellers and Buyers Interests
The seller’s interests may provide enormous ongoing value to the business, such as recruiting, sales, marketing, or establishing key alliances. These are often difficult positions to recruit for. However, the previous owner may be talented at one or more of these roles and may be willing to perform them at a salary below market value if the seller’s other needs are met.
Sellers are sometimes willing to work these positions on a commission basis if the role is structured to align with their lifestyle. Most retirees desire flexibility, and if you can offer this to the seller, you may develop a win-win situation in which you retain talent at less than market value and in which the seller meets their lifestyle needs. Structuring an arrangement like this can also assist in retaining key customers or employees. Key partners will feel more comfortable if they observe the seller’s ongoing participation in the business.
Selling a business is an emotional shock to some people. It may be a part of your life for so long that you feel empty afterward. Be prepared to deal with the loss.
- Most entrepreneurs are go-getters.
- To say, “I will be retired” is not enough. You need to direct your energy toward a new passion.
- You will find that a little preparation now will save you stress and anxiety about your future as you navigate the complex process of selling your business.