Three Steps to An Endless Summer

Summer is coming and that usually drums up memories of long relaxing getaways to the beach or mountains, time with family and friends, and freedom from the demands of a business…even if for just a few days. If that is starting to sound more and more appealing, it might be time to take a serious look at bringing on a motivated successor. This does not mean your exit is imminent, it simply allows you some additional flexibility to evaluate who you might invite to assume more management and leadership responsibilities, and when you might be ready to reduce your level of responsibility in the business and create your endless summer. Ultimately, it gives you the opportunity to evaluate your timeline and confidence in an exit strategy.

First - Who?

The usual suspects include family members, key employees or third party buyers. But your business isn’t ‘usual’. For your business, you need to consider what matters most to you. If you want the business to provide for your family, you have to realistically consider whether the family member(s) has the skills and experience to run the business profitably and sustainably. Are they motivated enough? Can you afford the options on a ‘sale’ to the family member and still fund a retirement lifestyle that meets your personal needs?

If you want the business to benefit your key employee(s), you have to realistically consider whether they have the skills, experience and motivation to run it? You also have to figure out what a ‘sale’ to them will look like and whether you can afford to do it.

Financing your Endless Summer

Most business sale transactions occurring between owners and family or key employees will be financed, in part or whole, by the owner. And, these are the most complex and challenging transactions to work through. Why? Selling your ‘baby’ to family or loyal employees is so emotional. Your deep connection to them is what makes the sale so gratifying and yet for the transition to work for all, it requires you to let go and accept a different leadership model. It’s easier to do that with someone you are not emotionally connected to. Are you prepared to release the reins over time, while financing their strategic direction?

Building Value: your Endless Summer

If a third party buyer is the best option for you, you need to build your strategy now. This is the most time consuming of the three options because you have to find them, negotiate and then sell. Starting now allows you to test interest, seek prospective buyers, and get feedback on the value of your business to a third party. We know it’s valuable to you, but what will someone else pay for it? With that information, you can choose to invest another 2 – 5 years or even 5 – 10 years, to make the timing and valuation of your business sale work for you.

Is it time for Your Endless Summer?

You’ve invested in your business. Now invest in your life. It’s your time.

Terrified

That’s not the word that comes to mind for most people when describing a future without the responsibilities of running a business. It’s not the word that comes up when imagining a life with the time to do whatever you want to do, and sufficient financial reserves to fund a range of options. So why is that the word I hear most often? Often, business owners confide in me about their plans for succession and how they are thinking about a full, or some sort of partial exit. Whether they are 55 or 75 years old, the most common emotion they express to me is fear. Despite a successful, financially rewarding career as an owner, this is a major life change, and they have fear. In some cases it’s a subtle gnawing fear – more of an uncertainty about getting started or a discomfort thinking about ‘what’s next’, making it easy to go on with business as usual. In other cases it’s a constant stressor as worries about finding that right buyer/successor, , concerns about fully funding their lifestyle in retirement, waning energy levels, or what to do with endless hours of free time permeate sleepless nights or creep in during the busyness of the day.

Our perceptions, their reality

I know what you’re thinking…You’re thinking ‘That’s crazy! Those worries are unfounded. They are successful business owners! Hard charging, financially savvy, with a backlog of activities they never had the time to do! This will simply be the next stage of a wonderful, earned, and well-deserved life!’

Sadly, that’s rarely what I hear. The fear they face is often due to one of the following:

• Stress from the reality of letting go of their business. This includes the stresses of finding a trusted, qualified buyer, negotiating through the sale or transfer of their business, and the uncertainty of whether their financial return will meet expectations…or worse, their base financial requirements.
• Losing their identity, and in some cases – their perceived status, built over a lifetime of growing and leading a successful business. Who am I if I am not the owner of…?
• Uncertainty about ‘what’s next?’. In our achievement-oriented culture, retirement/semi-retirement is treated as an exciting, coveted time! But many owners fear endless days of nothing -- boredom. And worse, they believe that if they broach the subject of their uncertainty with friends or family, they will be ridiculed or summarily dismissed. And they just might be!

The reality is that every owner will leave his or her business one day. Whether they leave to go TO something they have been waiting to do all of their life, find themselves ousted from the business as a new owner takes over, or they experience health or family issues…. They will exit.

The opportunity

To do it well, we need to address the fear. How? First, we need to talk about it! We need to reduce the stigma associated with the stress and uncertainty that comes with a life change of this magnitude. A change this big will often come with a wide range of emotions. Holding them inside serves no one. We need to be able to talk about them, express them, seek out others who are facing them as well. Let’s destigmatize the fear!

We also need to take action. We need to come together to create an environment where it’s acceptable, even encouraged, to acknowledge the stressors, and then we need to build systems and structures to navigate the transition from business ownership to what’s next. We need to support each other as we figure out how to let go of the responsibilities and identities that served us so well in the past and craft new ones, creating a different and exciting future.

Cultural Shifts

Some of the most significant shifts in our cultural and social norms have come from the combination of changing demographics, a collective recognition that change is necessary, and the innovation and creation of a whole new set of systems and structures to facilitate that change. It’s time to create a shift. With baby boomers turning 68 this year, six to 8 Million businesses will be changing hands in the next nine years. We need to address the stress and uncertainty head on. This is not just a nice to do. It’s imperative.

What are you willing to acknowledge…even if only to yourself?

Your Beliefs and Your Business: A Year End Review

I am a big fan of the year-end review. Yes, we are already into 2014, but it’s not too late. We all need to take an hour or two to evaluate – did you do what you said you wanted to do in 2013?? Did you get the results expected? This year, I suggest you add another review. Do a review of your belief systems. Are they serving you? Or are they holding you back? What do I mean by belief systems? Well, we have belief systems about everything. About what it means to be a good mom or dad; what it means to work hard; about how we should treat people; even what the expected response time is to an email or a text message. These beliefs govern everything we do from the moment we wake up in the morning until the moment we go to sleep at night, and sometimes they inhabit our dreams. So if they are so pervasive, and influence every action we take over the course of a day, shouldn’t we give some thought to whether they are serving us or not?

Don, a former client, believed that in order to be successful, he had to own his own business. His dad and his grandfather had been successful business owners, running a printing company that specialized in large volume printing. They repeatedly pressed Don to come into the family business. Don had spent his life listening to his father and grandfather discuss the business and it had no appeal to him. He wanted to fly planes. He had planned to join the Air Force out of high school and take a job with an international airline afterwards. Then his beliefs got in the way. He believed that the only acceptable path to success was business ownership and if he wanted to feel good about himself and his career, he needed to own a business.

As it often is in families, Don chose not to discuss his career goals with his dad. He knew he’d be shot down, maybe even ridiculed for choosing a ‘loser’ career path. His dad assumed Don wanted to join the family business, though there had been little indication of that. Dad’s beliefs about Don were so strong, they didn’t need ‘evidence’. After high school, Don enrolled in a local Community College, bridging an aviation program with business classes, transferring to a four year school to finish out his degree in Business. Upon graduation, he started in the family business.

Fifteen years later, Don was the Chief Operating Officer for his dad’s company, poised to take over as CEO and owner one day, and he was miserable. Don never wanted to be in the business and now his dad was pushing him to buy him out and run the company. Don felt trapped and was contemplating all kinds of exit strategies. Don’s beliefs about success had gotten in the way, and he realized that he was still living his life in alignment with a set of beliefs that did not serve him. He was not a failure if he took a job flying planes. He was not a failure if he chose to pursue a career that interested him! He was not a failure for believing he had a right to a career that energized and engaged him.

Don’s situation might be very different than yours, but the foundational question about whether your beliefs need a year-end review is still critical. What beliefs are serving you and what beliefs need to be changed because they are holding you back? It’s time to live the life you were meant to live?

Let us know what you discover!