In our line of work, you end up having a lot of conversations with business owners. It’s one of the more enjoyable and inspiring parts of the job.

These are people who very often started their business around their metaphoric kitchen table. They did it with little more than their personal credit card and the hunger – perhaps looking back now, the slightly reckless hunger – to go out on their own. No business plan. No back-up plan. No investor to bankroll things. Just the guts and determination to have a go.

By the time we get to speak to them, usually several decades have gone by and they have built their one or two person show into a large and successful operation. They have nice offices – sometimes multiple offices – with management teams and reporting lines and sophisticated systems.

Their business has grown beyond their wildest expectations. They remember their first employees and the sleepless nights they spent worrying about making payroll. And, today, they look back on all that they have achieved with a mix of well-deserved pride and often a touch of bemusement.

And they are now at the point where they are starting to think about an exit. They still love what they do. They love the relationships they have built. They love the thrill of chasing and winning new business, closing a deal, completing a fantastic project. But they are also that bit tired. The day-to-day tedium of running a business is just getting that bit old.

It’s time for them to think about what’s next.

Along we come as advisers. We start working with the founder on their exit strategy – ballpark valuations, likely buyers, the sale process, P&L normalisations. We start crafting the sales pitch, preparing the flyer and the information memorandum. We start unpacking everything that will be required for due diligence.

And then almost out of nowhere the owner suddenly begins having second thoughts. It’s not about the valuation. Yes, they want to maxmise their sale price. However, more often than not they have already done well out of their business.

Their apparent cold feet are being driven by something far deeper. For decades, their business has been their life. It has been an all-consuming focus, which is what it needs to be given how successful they have been. It has also been probably the key element of their identity – they are the owner of XYZ Pty Ltd, that highly successful business they started from scratch.

And then that scary thought pops into their head: what am I going to do next? Yes, there will be a handover period, maybe an earnout that will tie them to the business for a period. But suddenly, for the first time often in decades, they are confronted with the thought of what will they do when they no longer need to head into the office every day.

That question, that uncertainty can derail a sale process. We’ve seen it happen more than once.

We often say that the key to successfully selling a business is preparation. The more time a client spends preparing for a sale, the more likely they will be to achieve the sort of outcome they are seeking.

For a high-level snapshot of how to best prepare your business for a sale, please click here.

A key part of sale preparation

However, one of the most essential aspects of preparing for a sale – particularly for an owner/operator-type business – and an aspect that is often completely overlooked, is for the owner to stop and think about life after ‘the business.’ It’s inevitably going to be a time of significant personal change and change can be deeply unsettling and even destructive if it is not properly thought through and prepared for.

The superficial answer most founders that we speak to give us is that they are looking forward to taking a well-earned holiday. They are looking forward to travelling again, which is often something they have not been able to enjoy with a full sense of freedom for years because of the real or perceived pressures of work.

While taking that trip to the Greek Islands or that cruise or whatever is certainly something to look forward to, it does not answer the fundamental question: what are you going to do once you’re back from holidays and you no longer need to go into the office?

What’s the plan?

Clearly, there is no right answer to this question. Over the years, we have seen people exit their businesses and dedicate themselves meaningfully to every conceivable endeavour. We have seen people transition straight into property development. Others have become everything from sculptors to writers to farmers to full-time students. Some have focused on charity and the not-for-profit sector.
Whatever that next passion a business owner might have is, the key is that they have one.

It’s something they need to think through before they dive too deeply into the business sale process. In our experience, those that don’t, run the very real risk of waking up at 3am not worrying about making payroll but rather worrying about what they will do once they’ve sold out.
Sometimes that fear can derail the sale and what should have been an amazing moment of freedom and opportunity.