Ready to Sell Your Business? Prepare Yourself Emotionally First
Selling a business is often the biggest decision in an entrepreneur's life, and it isn't easy. That's why emotional preparation is key.
If you've built your company over the years with blood, sweat and tears, the idea of giving up control isn't very appealing. It can feel like you've lost your grip on the business you built. You become less of the go-to person and more of a parental figure that nurtures and mediates all relationships. This transition can be tough on anyone’s ego, but it’ll be especially painful if you’re unprepared. If you’re ready to sell your business, finding a buyer isn’t the first step—it’s preparing yourself for the process of letting go. Here are some of the emotional hurdles that business owners typically face when they sell.
Losing ControlAfter a sale, an entrepreneur’s role morphs into a hybrid of shareholder and senior manager. This is part of the process of transitioning day-to-day operations to a new management team while continuing to be a familiar face for customers and employees. Many entrepreneurs struggle with this, even though it’s exactly what they want the—opportunity to take risk off the table, monetize the business and to no longer be responsible for every decision, every employee and every payroll run.
But financial freedom comes at a cost: loss of control. This is exactly what many entrepreneurs struggle with. If you started, nurtured and built the business from scratch, losing control (or even perceiving that you are losing control) can be downright gut wrenching. First, you have to deal with the fact that you and the business are no longer one and the same. The way you are perceived by your family, friends and the community you live in may change. Suppliers and customers you deal with may view the transaction as "selling out." Even the way you feel about yourself may change. Business owners often don't consider how they will react emotionally to the process and they are often unprepared to handle these emotions once the excitement of closing the deal has passed.
How a company’s sale affects employees can put a lot of stress on a business owner. Post sale, the buyer may want to realize synergies or cost savings that may impact your employees, who may be people you've worked with for years. Administrative positions may become redundant. This is particularly difficult for smaller, private companies where some roles may be filled by family members. Other cost savings or integration steps typically include changing accountants, lawyers, insurance brokers and most of the professional relationships that you may have built over many years. Sometimes these are relationships that go beyond the professional; they may be guys you play weekend baseball with and who ultimately depend on your work for their livelihood. Taking that work away will be tough on them and, by extension, you. That’s why it’s important for entrepreneurs to anticipate these changes and discuss them with employees and other partners who may be affected well before the sale happens.
Dealing with Employees
The Day of the TransactionThe day you complete the transaction and sell your business may be the most emotional of all. This is the big pay day, yet it may feel completely anticlimactic. Why? This will be the day when it will hit you that you no longer own everything that you have worked your whole life for. You’ll realize that you now have partners or shareholders (or other people) to be accountable to that you didn’t have before. You may even feel more responsible because you don’t want to let anyone down. That’s why owners’ stress levels tend to go up, not down, after they sell. It’s also why most business owners who sell and stay on to manage the business post-sale work even harder—they don't want to let their partners down. This is great for the buyer who tends to want an owner to stay on. After all, the owner is someone responsible and conscientious who understands the business inside and out. However, it can be counter-productive for the owner and even emotionally debilitating.
Preparing to Sell Your Business
The emotional aspects of selling your business are manageable if you are prepared. This type of transaction generally involves assembling a team of advisors that includes lawyers, accountants, business brokers, etc. Consider including a support system in this team as well. Find someone else who has gone through the process and talk to them about how they got through it. This can be anyone you trust who can guide you through the difficult transaction steps like due diligence. More importantly, it’s someone you can phone when you are having doubts about why you ever agreed to sell your business in the first place. These doubts will inevitably happen at some point, so having that experienced person to call on for support is invaluable until you finally come to terms with the whole process.