When business owners start planning for the transition of their business, quite often their business and personal financial position is what is planned for. While these factors are important, owners often give little consideration to their emotional readiness to transition. Preparing to transition a business involves some of the biggest decisions of an owners’ life and careful thought and care should also be afforded to the emotional journey.
When it comes to exit and/or transition planning, there are a number of options that can be built into the process to ease owners in and out of roles and help smooth the overall transition. Owners, if they are selling, may include a timeline for staying on as a consultant before or after the transition. If transitioning the business to the next generation or management, there may be a strategy incorporated for choosing and providing hands-on training for the successor.
What does it mean to be personally ready for post-sale and retirement? More specifically, what does the process of giving up control of a business you may have built from the ground up or have helped to grow, look like? Ignoring the emotions tied up in being a business owner or CEO likely means ignoring a large part of your identity. In order to transition as smoothly (and happily) as possible into the next phase of your life, it is critical to think about and plan in advance for the emotions that will likely surface while stepping out of that self-defining role.
In the Harvard Business Review article “Dealing with the Emotional Fallout of Selling Your Business,” former business owner Jeff Giesea writes “When you spend years architecting your life around a business and suddenly it’s gone, you’re probably going to have an identity crisis…. These issues,” Giesea adds, “don’t mean you shouldn’t proceed with a sale, just that you may want to prepare for the emotional journey afterwards.”
What does preparing for the emotional aspects of transition – before and after exit – look like and where do you start? The following topics and questions should be discussed with your trusted advisors to help develop non-financial goals, objectives and a vision for life after business.
- Control – How will it feel to let someone else make the decisions? Are you emotionally prepared to transfer the reigns when the time comes? How can you plan for it?
- Intellectual stimulation – As an owner, you are used to making many strategic decisions and have been challenged intellectually on a daily basis. What other areas or topics might you be interested in learning about? What other creative outlets might exist to exercise those skills? Are there courses or classes you have always been interested in but never had the time to explore?
- Lifestyle – Are there any adjustments you need to make to your lifestyle? Consider and plan for any changes in income (up or down) in your personal financial plan.
- Change of pace – Are you ready for the change of pace? With more time on your hands, what will you do to keep yourself busy? There may be new or existing hobbies you want to take up. Is there a charity or cause you are passionate about? A new career plan? A pet project?
- Relationships – How will you stay connected or reconnect with your spouse, family or friends? As a business owner, you are part of a community and business family; how will you stay connected with those people?
- Health – Think about how you will balance your physical and mental health. Are there clubs, recreational facilities or other interests that will keep you active? Do you have a confidant or a coach you can talk to about the feelings and emotions pre and post transition?
- Retirement – What is your vision for your life in retirement? Are you ready to retire full-time or is there an opportunity to work part-time? Do you have any travel plans? Do you plan to spend more time with family and friends?
Not only is having a transition plan that was put together by an experienced transition planning advisor personally reassuring, it also adds value to your business and can be a “green flag,” so to speak, for buyers when looking at a deal. Knowing an owner has put thought into being ready to transition can put the buyer at ease during negotiations. Giving yourself time to plan for the emotional and lifestyle changes you will face during your transition and after your exit will only add value to you and your business’ wellbeing.
If you are interested in discussing your future exit, connect with one of our transition planners to discuss how we can help you with financial and personal transition readiness planning.