Selling your business is often a goal you’ve been working towards for years. But viewing it as the finish line, rather than the start of a new journey, could lead you to overlook steps that make the next chapter of your life more enjoyable.
Entrepreneurs often find that their personal goals and finances become entwined with those of the business. So, once they exit the business, it might feel like starting from scratch. Making what comes next part of your exit strategy could make the transition easier and allow the business decisions you make to support your lifestyle goals.
Read on to discover why selling your business isn’t the finish line and how to prepare for what comes after.
Not looking beyond your exit strategy could make transitioning more emotional
Don’t underestimate the emotional challenge of moving on from your business. You’ve likely worked hard for years to create a business, and it played a prominent role in your life. Deciding to take a step back might mean your days lose their structure or that your social connections reduce.
If this isn’t something you’ve prepared for, you might feel disappointed or struggle to adjust.
So, rather than thinking about the sale of your business as an ending, you might benefit from considering how you’ll spend your time afterwards, from what you’re looking forward to day-to-day to one-off experiences.
Long-term goals could help you calculate how much is enough
The life you want after exiting your business will inform key financial decisions, including how much you need to make from your business.
When you’re setting a sale price, there are several ways you might calculate the figure. However, don’t overlook working out how much is enough for you. By creating long-term goals, you can start to get an idea of what income you’ll need each year. Some of this income may come from other sources, such as your pension or savings, but the sale price is often an essential part of your finances.
Understanding how much is enough for your personal circumstances could help you better assess offers.
For example, imagine you’ve set a sale price of £4 million based on turnover. You receive an offer of £3.5 million. You’ve already calculated you need £2.2 million to be financially secure and live the life you want. So, you feel comfortable reviewing the offer and potentially accepting it.
Without understanding how much is enough, you may have dismissed the offer and potentially delayed starting the next chapter of your life.
Your financial position may change
As you near the date when you plan to exit the business, you might benefit from reviewing your financial position. Areas like your tax position or risk profile may have changed.
For example, as you were building wealth, you might have invested and taken a moderate level of risk. Once you’ve exited the business, you may be drawing on assets to create an income, which could mean it’s appropriate for you to reduce the level of risk you take.
If you view leaving your business as an ending, you might simply leave your finances as they are. By looking beyond the milestone, you can adjust your assets and plan so they continue to be appropriate for you.
Redefine what success means to you
As a business owner, your definition of success may have been tied to the performance of your business.
Once you’ve stepped back from the business, it’s a chance to redefine what success means for you. Perhaps you want to support family more in retirement, focus on personal projects, or you’re already planning to launch a new business.
Finding something that provides purpose and a sense of accomplishment could help make life feel more fulfilling.
Get in touch
Whether you’re at the start of your journey to build a business or you’re ready to exit one, we could work with you to create a tailored financial plan that may help ensure your personal goals don’t fall by the wayside. Please get in touch to arrange a meeting.
Please note:
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.