Everyone has fears and sometimes these fears can prevent them from taking the action they need to reach their goals. This can apply to retirement, where a business owner wants to sell their business.
“There can be a considerable amount of anxiety around planning for retirement, especially if it means letting go of something you have worked hard to build,” observes Christiane Hutchinson, CEO of Biramis Management Partners.
“Business owners naturally feel close to the thing they have created, but this can mean they delay their plans for exit to the extent that they find themselves in a position where they want to leave but cannot.”
There can be crucial differences between how an entrepreneur views a business and how a business owner sees things. These differences are most starkly exposed when it comes to selling a business.
“Entrepreneurs will often buy a business with exit as an inbuilt strategy. In the same way that a property investor knows that the value lies in what it will eventually sell for, so the smart entrepreneur knows that building value must be their priority.”
On the other hand, the business owner may have a very different history with their business. It is likely to be something they have nurtured themselves, and put a lot of themselves into it.
“There is an attachment there, one which potentially obscures or obstructs certain structural developments essential in building value.”
“If the business only truly functions with the owner’s close input, then the value lies more with the owner than with the business itself”
This same sense of close, personal involvement can also contribute to the fear of how to make retirement work.
“It’s a fear of letting go, but also of not knowing how to let go. In fact, this process should be happening considerably earlier.”
Planning for exit should not be a race to the finish. To optimise the value of a business, owners must look at both its structural underpinnings and its outward marketability.
“The clearest way to start preparing your business for exit is to first imagine it running without you right now”
“Are there systems and key personnel in place that will ensure this happens? If you were to sell it tomorrow, would the new owner have the right leadership structure to work with?”
This is also about visibility in the market.
“What will market your business independently of you? Is your current marketing activity working, and is it preparing the ground for future profitability?”
There is another useful perspective to take, that acting now to improve the business, even to grow it, is all part of building its long-term value.
“Just as you might redecorate or refurbish a property to sell it, but in the process, create something more attractive as a living space that you currently occupy, so strengthening your business means you reap the benefits now and in the future, when you come to sell it.”