Selling the small business you've built over many years, or even decades, is never easy. But for many entrepreneurs, the hardest part isn't preparing the business for the marketplace or finding the right time to exit.
As a business owner, you have invested a significant portion of your life in your enterprise. Over time, you likely have developed a personal connection to your company and for better or worse, your small business has become an important part of your daily life.
So when it's time to say goodbye, it can feel like you are losing a member of the family. Sorrow, anger, a sense of loss--entrepreneurs experience a wide range of emotions during the sale process. And if those emotions are left unchecked, they can have a real dollar impact on the outcome of your business sale.
Although it's natural to feel sentimental or even a little sad, you can't let emotions like anger and defensiveness alienate prospective buyers or dictate the terms of the sale. As much as possible, you need to find ways to remain objective, creating space between your emotions and your decision-making routines before, during and after the sale.
Emotional baggage jeopardizes the profitable and timely sale of your small business. As a result, one of the most important things you can do to manage your emotions is to prepare a comprehensive exit strategy long before you are ready to list your company in the business-for-sale marketplace.
By planning your exit in advance, you will be more emotionally prepared for the transition when it actually occurs. Your family members should also be involved in the exit planning process since the business has likely been a major part of their lives and they may need time to adjust to the idea of someone else owning your company.
At some point in the exit planning process, you will need to seriously consider what you will do after the sale has been finalized. Sellers who lack a solid plan for the next stage of life find it difficult to let go of their businesses and are more likely to allow personal emotions to hijack the process.
During the sale process, it's critical to remain focused on operating your business until it has been legally transferred to the new owner(s) since deals can suddenly evaporate during due diligence or other stages of the process.
But to commit time and energy to running your business, you will likely need to rely on the assistance of third-party professionals (e.g. brokers, attorneys, accountants, etc.) for various seller functions. The added benefit of outsourcing specific seller functions is that professionals bring objectivity to the process so that interactions with prospective buyers are based on facts, not emotions.
It can also be useful to confidentially consult with peers during the sale process. Rather than wrestling with your emotions on your own, consult with trusted members of your peer network and seek advice about what they experienced during the sale of their businesses.
Also, you should think carefully about what role you may be willing to play during the transition of your business to a new owner. Many buyers desire that the previous owner remain with the business, on a consulting basis, for three to six months after the transaction, to help ease the transition. Make sure that you're emotionally prepared to play this role in a professional manner. It is important to recognize that key decisions will no longer be your own and that you may not agree with all of the changes the new owner is making.
Business owners are frequently flooded with emotions after they have finalized the sale and transitioned out of the business. Now that they finally have time to reflect, sellers can feel a sense of loss, especially if they developed close friendships with their employees.
But unless the new owner has asked for your advice, it's a bad idea to check in on the business after the sale has been completed and you've moved on. It's likely that the buyer will have made changes in the business and it can be difficult to accept the fact that someone else is calling the shots in the company you built. Similarly, try to avoid talking about the business with your former employees in social situations since little good can come from second-guessing the new owner in front of current employees.
Although the emotions you may be feeling are real, the bottom line is that you and your business have moved on. Instead of looking backward, it's time for both you and the business to move forward and embrace the next stage of life.
Get answers to your questions about buying or selling a business from the experts at BizBuySell buy tweeting them to @BizBuySell.