3 in 4 business owners regret exiting their business one year on. It’s shocking that so many people make the wrong decision. So why do so many people wish they hadn’t sold their company and, more importantly, how can the rest of us avoid regret when selling your business?
Why do 75% of business owners regret their exit?
Business owners are human. We sometimes make hasty decisions based on heart or head. We may rush sales for family, health or financial reasons. We can be unrealistic in our expectations and fail to explore all the options available, resulting in 95% of owners being unhappy with the net proceeds from their exit.
This is why it’s sensible to enlist the services of an independent broker to help you navigate the practical and emotional aspects of selling a business. In our 17+ years’ experience as business brokers, we see four key areas where a business exit may fail to satisfy. Here’s a summary of each and our tips on how to avoid them.
1. You’re unclear why you’re selling
What are the factors pushing or pulling you out of your business? There are many reasons why you might want to exit. The most common include retirement, and wanting to spend more time with your family (the pull factors), but can include things like burnout and health problems (the push factors).
Business owners commonly sacrifice other parts of life to focus on growing their business. Exit is often viewed as an opportunity to travel, pursue hobbies, and enjoy all of the things you never seem to have time for (also pull factors).
To gain clarity and focus, consider what’s important to you and what your life will look like after you’ve sold your business. Perhaps discuss it with a business partner, share your thoughts with a friend or family member, or better still, chat to your friendly business broker!
2. You haven’t considered the practicalities of selling
Another common reason for regret is a failure to explore different exit strategies. Some business owners go full steam ahead to sell their business outright and don’t want any future involvement in its running. Then months later, they realise this possibly wasn’t the most sensible or lucrative option.
Don’t let this happen to you. Take time to research the options available to you and your business. Talk to people in the know. Ask owners who’ve recently sold about their experiences. Speak to a broker who can advise on possible exit strategies and explain the pros and cons of each. Or why not request your free copy of our Exit Planning Checklist.
3. You’re too attached to your business
When you’ve grown your business from a fledgling idea into a reputable brand, it’s natural to feel a personal attachment. You’ve put in creativity, long hours and years of life, invested your own money and built lasting friendships with colleagues and customers.
Unfortunately, having such a strong connection to your business can also make it difficult to leave. So what will you do when its no longer yours to own or manage?
A good way to start distancing yourself from your business is to focus on the roles and responsibilities you have outside of work, for example as a volunteer, a parent or a football coach. How will you develop these areas of your life when you have more time to devote to them?
4. Failure to consider the people impacts
In the early stages of exit, it’s understandable to want to keep your intentions confidential. As your exit progresses, it’s important to communicate your plans with employees, suppliers and customers. Failure to do this could seriously devalue your business.
Your people are your greatest asset. Key employees can provide valuable support with planning, due diligence and managing the business whilst you are focused on your exit. Telling people too late may cause unrest and disengagement. Any sniff of uncertainty can lead to customers and suppliers cancelling contracts.
Finding the right time to share your intentions and ask for help is key. Working through the exit process with an experienced business broker can be a great support.
How can you tell if you’re ready to leave with no regrets?
Every business exit is unique and very personal. It’s important to keep a level head and not let your heart overrule your head (and vice versa!). That’s where PREScore can help. PREScore is a short, online questionnaire that rates your personal readiness to exit. It focuses in on your reasons for exit and provides useful, credible advice on how to to ensure a happy and lucrative exit.
A few minutes spent online could save a lifetime of regret and give you the direction you need to build value in your business before you cut ties. We specialise in guiding manufacturing, engineering and B2B businesses to a successful business exit with free valuations and exit planning support and advice. Ask us about PREScore to approach your exit with structure, balance and clarity.