Selling a Business: Transitioning to the Next Phase

Selling a Business: Transitioning to the Next Phase

 
Work provides individuals with a sense of purpose or identity, a community to interact with, and a way of structuring time.

Often, when a person retires, it is a time of reinvention, transitioning from working to trying to find an activity that is both fulfilling and replaces the time and role that was taken up by work. Retirement can be very jarring for an entrepreneur, as they tend to define themselves by their work and their work community. Almost every successful entrepreneur would agree that building one’s company becomes their primary purpose, their connection to their community, and the predominant and most meaningful thing that they do with their time. Entrepreneurs are usually highly involved in their companies, making it easy to be caught off guard by the drastic change in lifestyle that comes with retirement.

There are many common struggles that business owners face when they decide to retire and sell their business beside the loss of their identity and community.  With our training from the Sudden Money Institute, we have a few recommendations for a business owner that is looking to sell their business and transition with ease into retirement.

Before the Sale
Take an audit of your personal relationship with the company and community. What percentage of your community is made up of work contacts? How much time do you spend working on the business? Does your sense of purpose come predominantly from being a business owner? Do you principally self-identify as a business owner?

Once you have done your personal audit and determined the degree to which the business is supplying meaningful relationships, use of time and a sense of purpose, you will be able to identify and start building new roles for oneself within the business as a way of transitioning out of the working world.

Often, for a business owner, ceasing their involvement in the company they started can be difficult. One option to transitioning more gradually out of the business, can include reducing the number of days to work, passing on the day-to-day activities to another key employee, becoming the chair of the company’s board, or taking on more of an advisory role for the company. By slowly taking a step back from the business, you will be able to take more time to move towards the next stage of your life.

Another key aspect is to understand the financial implications of retirement and the sale of your business. Working with a financial advisor will help you develop a plan for your assets in order to achieve the retirement lifestyle you want, answer questions about the legacy you want to leave, and develop a holistic plan to achieve all your post-sale financial goals.

After the Sale
From our experience, the first year of your retirement after the sale of your business can be filled with many different diversions such as taking up new hobbies, starting another business, angel investments, mentorship, travelling, renovating the house, spending time with family, or even large purchases, such as vacation properties. This can be disorienting for all members of the family. Further, once the shine of the new activities has worn off, many retirees begin to search for that sense of fulfillment they experienced with entrepreneurship.

Our advice for the first year is to give yourself permission to not have to make any unnecessary decisions – give yourself and your family time to adjust to your new “normal”. By allowing yourself to enter a decision-free zone, you will be able to give full consideration to what you would like that do with your time and energy.

For many entrepreneurs, the sale of their business and the concept of retirement can be a stressful and disorienting time in their life, and can affect their sense of purpose, their community and relationships, and result in a loss of daily structure. Rather, this should be a time for you to celebrate what you have created. Following these recommendations is a great way of ensuring that you transition smoothly into the “new normal” phase of your life called retirement.