Have you thought about what, why and when you’ll need to ask when it comes time to sell your business? You will need to someday and doing so smartly will make a lot more sense than just waking up one day with an overwhelming need to get out.
After my wake up call 2 weeks ago (described in my previous post) I have had time to think and contemplate on many things. The majority of these thoughts begin with questions to oneself –
- Was this meant to be?
- What could I have done differently?
- Did I have a plan for such an eventuality?
- What if the unthinkable had happened?
This was the seed for this post on exit and transition planning. I believe the same kinds of conversations should be ones that every entrepreneur or business owner needs to have well before they actually exit.
Here are 6 conversations that you need to have:
Conversation 1: What changed that you want to sell your business? Almost every time when an owner wants to sell it is because something has changed. The change is rarely a positive one. Although sometimes a change does signal that it is time to sell, more often it signals that you should first address whatever is making you want to sell.
Conversation 2: Why do you think this is a good time to sell? Almost everyone has a highly emotional experience when they sell their business. Eventually you get around to what you’re going to tell the world, but what are you telling yourself? If you decided to sell your business because of emotional reasons it’s likely the wrong time to sell.
The right time to sell is when you’ve made a carefully considered decision and ideally when your business has had a couple of years with increasing sales and profits. If business takes a dip, it is not the right time to sell.
Conversation 3: Life after the sale. How will you spend your time? Jack Beauregard from the Successful Transition Planning Institute calls this your second act or “from CEO to second in line at Starbucks”. Having some idea about what it means for you and how this manifest itself in your life is important.
Conversation 4: Are you financially ready to leave your business? The first thing you want you to figure out is how salable your business is. Just because you want to sell your business doesn’t mean there is someone waiting in the wings to buy it. This is especially true if your business has just had some sort of setback.
Conversation 5: You’ll want to ask yourself whether you’re in a place to ride off into the sunset, or if you’ll have to continue working after you sell your business.
Conversation 6: Is your business ready for sale? The key question here is how involved as an owner are you in day-to-day operations. Do you work in your business or on it?
The “I want to sell my business” conversation is not a short conversation. It should start at least 1-2 years before you exit. One way is to join a peer group of CEO’s and business owners.