I was speaking with an advisor to business owners recently about my client screening process for selling a business. I said that to deliver the best result, I ask business owners to write down three sets of goals. The reason is that many, if not, most owners only think of the business sale (the transaction) as the goal, when it really should be the catalyst to achieve their goals.
If you are a business owner who has not spent time reflecting on your goals and writing them down, you may end up with a nice chunk of change in your bank (i.e “a bag of money”), but also a great sense of dissatisfaction or even anger.
Why, you may ask? Because it is rare that the “bag of money” is the same size what you (the owner) envisioned when you started thinking about selling your business. If the only goal is the size of the bag of money, and you are destined to receive one smaller than you hoped, you will undoubtedly feel bad or even cheated at the closing table. About 10 years ago, a study of owners who had sold their business in the previous year revealed that 75% were dissatisfied with the result (that is not a typo). Three quarters were unhappy – wow!
So what can you as a business owner do to avoid feeling like all those other business owners? Start thinking of three sets of goals like these and writing down yours:
- Personal Goals. One example might be making sure your key people are treated well during the transition from you to the buyer. Another could be that you feel listened to by your advisors and the buyers. Another might be that you get a fair consulting contract that allows you to take that three-week trip to travel the country (that you promised your spouse you would do when you sold the business).
- Business Goals. One example might be to see a new product launch that you have spent months and many dollars on prior to the sale. Another could be that the buyer maintain your location, since it serves as an anchor to other local businesses in the community.
- Financial Goals. Although it seems obvious that the bag of money should top-off (or maybe create) your retirement funds, you may have other needs and wants. One could be setting up 529 education accounts for your grandchildren. Another could be a large donation to your Alma Mater. One more might be to join or create an Angel Investing fund/group, so you can offer money and advice to start-ups (and keep your entrepreneurial juices flowing)
There are likely dozens of other goals you can think of, when you put your mind to it. Better yet, ask your spouse/partner, or adult children for ideas (or their goals – you may be surprised what you learn). The key is to get started now, even if you are “years away” from selling your business. Why? Because it often takes years to get the business ready to sell, and yourself ready to leave. Waiting until the day of the closing will mean you end up like the 75% of unhappy owners who sell.
If you’d like a great tool to help you think more deeply about selling your business, as well as your concerns that might arise, check out The What’s Next? Self-Assessment (save 50% with this coupon code: xd2f5tg).
About the author: Paul Cronin is principal of The Platinum Years as well as an M&A Advisor at True North Advisors Group (Boston, MA) – www.tnag.org