You may not see this question as relevant for you at this time.
After all, you have made your decision to sell the business, so what difference can questioning your motives make?
You may have discussed it with all the significant others in your life and they, like you, have agreed that this is the right thing for you to do at this time.
Perhaps it has always been you intention to sell the business now. To fulfil your life’s plan, and live your dream.
This may be one of several businesses you already run. You may plan to open another business when this one is sold.
You may be going back into employment, or planning to retire with more time for hobbies, the family, and simply enjoying yourself. Maybe you will want to give something back to your community through voluntary work.
ExitAdviser would not be doing its job if, at this important junction in your life, it did not offer you a final chance to reflect on your choice. So that you can make the decision with, "your eyes wide open”. And, to check that your priorities are right.
What have you got to lose?
This how-to article simplifies the issue into three parts:
- What stage are you at in your life?
- How balanced is your life?
- How much money do you really need?
1. Stage in life
The average life expectancy is rising steadily in most affluent societies.
A significant bi-product is that people set new goals and challenges, sometimes involving energetic age-defying activities. Let’s assume for now that there are 4 broad stages to life divided into (roughly) 25 year chunks and defined in the following ways:
- Stage 1: the age of education, and acquiring life skills (up to 25 years of age)
- Stage 2: main income earning years (25-50)
- Stage 3: start of a new life and challenges (50-75)
- Stage 4, the age of dependency (75+)
If we further assume that we want to put off the age of dependency (Stage 4) for as long as possible, then the other three stages become the primary focus of attention. This assumes of course that you have made adequate provision for the costs of Stage 4 dependency, if and when it arises.
The Stage 1 years are the formative ones that ready you for life. Stage 2 aims to make you financially secure. Stage 3 then allows you to develop interests and pleasures without the financial imperative.
The reality is that these stages in life are becoming ever more blurred with the growing choice of options. For example, people are increasingly starting their own business, or a second business, in Stage 3 of life in line with an interest, hobby or passion.
By contrast, in the Internet age millionaires are being made by the age of 25. They jump straight to Stage 3, perhaps missing out on Stage 2 altogether.
You may be retired, in Stage 3, but have decided to go to University to take the degree that you missed out on earlier in life. This effectively means reverting back to Stage 1 learning.
Viewing the stages of life in this flexible way, without thinking of age, is really healthy because it leads you to consider what’s possible for you. Think of the many potential combinations from the menu of activities that you could select. So many people have proven that it’s never too late, irrespective of age.
Think of those occasions in the past when you have been in a state of what Psychologists call "flow”, frequently mentioned in the context of sports men and women. This is where you are in a "zone" of such total concentration and emersion in an activity that it seems effortless. Chances are, these are the things that you are naturally good at, and enjoy doing.
What are the possibilities for you as you contemplate a different future? How will you discover your hidden talents?
2. Balance of life
What does balance in life mean for you? Typically people look to maximise their happiness, whatever this means to the individual.
What really makes you happy?
It's a sobering thought that, although average incomes in the USA have more than doubled over the past 50 years, Americans are, on average, no happier. So life’s happiness is clearly not just about money.
We all have a mix of needs, some mainly practical to make ends meet, others that make us more directly happy. Also, we all have our own idea of a healthy balance in our personal "Wheel of Life”.
Let’s take ten general categories, in no particular order, to cover the spectrum of needs on your Wheel:
- Romance, "significant other”
- Close friendships, socializing
- Physical environment
- Holiday, sports, relaxation
- Your business, work
- Financial position
- Health, physical and emotional
- Personal growth, learning and spiritual
- Community, helping others
These categories should account for the majority of your time, sleeping excluded of course!
Think of how things are for you now.
Score each of the above ten criteria on a scale of 1 to 5, where 1 is "unfulfilled” and 5 is "complete contentment” to give you a measure of how well your life is in balance.
Now think about the implications of these scores for you and the others around you. Does this feel about right, or do you feel an urge to make changes? You may want to go further by raising your level of self-awareness to discover your true self.
How might you re-balance your Wheel of Life for the future? Re-score your Wheel and compare the results with your first attempt.
One way of thinking about this is to imagine that you are present at your own funeral, where you witness and hear what other people are saying about your life, looking back. How do you want to be remembered? How will you have left your mark?
Taking your conclusions from the Stages of Life and the Wheel of Life (sections 1, and 2) you should now be able to establish your real priorities going forward. Life beyond the sale of your business.
Where do you need to focus your attention and energy? And, will you have enough money to achieve your new goals...?
3. How much money do you really need?
Can you afford the items on your "bucket list”?
When you started your business do you recall working out how you could afford to just live? And to pay those bills before the money started to roll in from the new business?
Most people when they start a business will have an idea of their "Personal Survival Budget”. In other words, how much money there is in savings, loans, asset sales or other income to cover life’s expenses while they are not earning.
What are the financial outlays? How necessary are they, really? Could they be trimmed back or eliminated to make limited funds go further?
Hopefully, when selling your business the picture is a lot rosier.
You will still have expenses to cover, perhaps this time a more complex mix now that you have taken on more commitments. There may now be needy dependents and different bills to pay. Pension contributions may be a major consideration, or the purchase of further assets such as real estate to build up your security blanket.
With luck the sale of your business will cover all these things, and more besides.
It’s possible that the valuation from ExitAdviser’s Business Valuation Tool, which is a rough guide only, has left you concerned about a potential shortfall compared with your expectations, and your ability to meet forecast financial commitments.
In this event, you may need to make compromises to reconcile any major differences, or perhaps even consider taking more time to enhance the value of the business before selling.
ExitAdviser hopes that you have appreciated this opportunity for reflection, before you go on to plough your new furrow!