Selling Your Business: Are You Emotionally Ready?

Don’t Get In Your Own Way

In previous posts, I have stressed how important it is to be financially ready to sell your business. Have you put in all the work required to make the business attractive to buyers?

But believe it or not, the biggest mistake to avoid when selling your business has little to do with the business itself. It has to do with you.

If you’re not emotionally prepared to sell your business, it’s going to be a rough ride to the finish line and in the years that follow.

Terri Krishova, a strategic business attorney from Maslon Law Firm described it this way: There’s an x and y axis between your emotional needs and your business needs when considering the right time to sell. Your business may be primed in every economic aspect for selling, but if your emotions aren’t in check, the time isn’t right.

Take it from me – nobody ever feels 100 percent ready to sell. But the longer you wait after your business is financially ready to sell, there’s a good chance that something will occur to depreciate the value of your company.

Or, if you start engaging in negotiations when you aren’t truly prepared to turn your “baby” over to someone else, it could hurt your company’s sellability in the long run. It could also make life a struggle in the years following retirement.

So here’s the million dollar question: If you’re not emotionally prepared, how should you proceed? Get yourself ready.

4 Perils of Being Emotionally Unprepared to Sell

1. It wastes time and money. Usually, a seller won’t admit they don’t feel ready. Rather, they will drag potential buyers through a lengthy and costly negotiation process, making excuses as to why they don’t agree to potential deals.

Things get even stickier when a business partner or multiple partners are involved. You can spend time and money at the negotiating table, and then get to the end of the process and realize you are not on the same page about closing the sale.

Nobody wins in either of these scenarios. Besides wasted money, it can also cause undue stress and burn bridges between partners.

2. It scares away future buyers. In the worst cases, a seller may go as far as actually signing an agreement to sell, from which they later decide to walk away.

Even if you are able to back out of a binding contract, doing so will severely hurt your reputation going forward. Word gets around among buyers, and if you find yourself on some sort of buyer blacklist, it will make selling that much more difficult in the future.

3. It provides a chance for business to decline. You never know what will happen should you hold off on selling. The economy could go down the drain. A competitor could come out with a superior product or service. Or, unexpected health complications could arise.

The point is, unless you’re actively growing your business or looking to acquire another, it’s the right time to sell. The longer you let emotional barriers get in the way, you just never know what could happen.

4. It takes the joy out of retirement. You’re not necessarily in the clear as soon as you sign the closing documents with a buyer. Studies have shown that nearly 75% of owners are unhappy in the first six to nine months after their retirement.

Why? Because they sold their business before being emotionally prepared to do so. They feel unfulfilled and depressed with too many leisure hours.

6 Ways to Become Emotionally Ready

Unlike preparing your business for selling, preparing yourself doesn’t have to take years. Here are six simple steps you can take to become emotionally ready to sell.

1. 1. Write down your reason for selling.
      If you are thinking about selling your business now, chances are it’s been part of your plan from the get-go. Go back to that time when you first conceptualized your long-term goals. Physically capturing these ideas in writing can help you focus and clear your mind.
   2. Think about your post-retirement self.
      For the better portion of your professional life, you have identified yourself as a “business owner.” So what’s left when you shed that title? Surely you have other goals, hobbies and ambitions.It’s important to start thinking about your life after selling your business well ahead of time. Find something that will continue to fill you with self-worth and purpose. It could be writing a book, learning a new skill, or pursuing a new hobby.
   3. Talk to your family and friends.
      This is a huge step in your life that you shouldn’t have to walk on your own. I talk with my wife about the ups and downs of my business. I encourage you to discuss your feelings with your loved ones as well.
   4. Let business guide you, not emotions.
      If the numbers are there, accept them. That’s the beauty of business – it’s quantitative, unlike the qualitative nature of emotions. If all economic signs are pointing to sell, accept them rather than fish for excuses.
   5. Listen to your advisors.
      You assembled an advisory team for a reason (or if you haven’t, you should). Heed their advice. They can likely take a more objective approach to the subject than you (the owner) can.

   Consider including an industrial psychologist on your advisory team. Although selling your business is a financial transaction, the negotiating process can raise a lot of negative emotions that can potentially kill the whole deal. An experienced “merger coach” can help you anticipate and manage some of the complex emotions that may arise during and after the sale.

   Thinking about selling your business? Download our FREE guide, Code Red: 12 Seller Mistakes, and get ahead of the game. Still have questions? Let’s chat. (561)543-2323