In a recent survey, CEOs and middle market business owners reported that one year after they sold their business, 75 percent were displeased with their decision to exit.
“There’s definitely a big gap in how we’re helping business owners, and how business owners are approaching their transition out of their business, if 75 percent of them are looking back after a year and are unhappy,” says Stacy Feiner, Psy.D., a clinical psychologist and management consulting director at BDO USA LLP.
Smart Business spoke with Feiner about mistakes business owners make when they transition out of their companies and what to do about them.
Why do you think so many business owners regret leaving their businesses?
Many times they are disappointed because they don’t plan well enough. They go from being the go-to person while running the company to feeling irrelevant after they exit. Often business owners receive canned advice about what retirement should look like — options like joining boards, playing golf or traveling. This might be good for a while, but then what? Business owners don’t get help imagining how their life can have as much meaning, or more, than when they were running their business.
Business owners also may experience seller’s remorse and lament that they didn’t get the correct value for their company; perhaps looking back they didn’t take the opportunity to increase the value of their company when they were still in control because they weren’t motivated and not advised to.
Business owners, and their advisers, may fail to consider the far reaching impact of the business’s legacy. For example, a business owner sells their company, not anticipating that employees will lose their jobs or the firm will be relocated. That business owner’s legacy in that community has now dissolved.
Also, sometimes the buy-out agreement that the business owner signs up for does not play out as planned. A business owner might create an agreement with a buyer to stay on as a consultant, but the relationship he or she intends is less than expected, and the former owner finds him or her self with less influence than anticipated.
How can business owners make sure life after their exit doesn’t fall short of expectations?
Think of planning your exit as a capital investment. It’s an investment, not an expense. Just like you’d spend $4 million to build out a new centralized distribution center, preparing your business for a transition is not business as usual. Work with a management consultant or executive coach who will make sure you wind up, rather than wind down, during your final years in the company. Put the business in the best possible position to succeed for the next 30 years, whether you’re turning it over to family or selling the company to a strategic buyer. Put your company in pristine shape.
That same coach also will help you determine what you want for your company after you’ve left and what you want for your life when you have it back — to create a true legacy. While you’re still in the business and have social capital, you can begin to network for what you might want to do after you leave your business. You were probably in your 20s when you picked your career; this is your chance to revisit that decision now that you have the means and the wisdom to follow your dreams.
Business owners lie awake worrying about their employees, their employees’ families, their own financial solvency and how it will impact their family and future generations, and how they are going to be remembered. An executive coach is able to bring psychological strategies to those worries and help the business owner find the best answers for him or her.
This is not the first time a business owner has succeeded through a transition as the company has grown. The difference is the stakes are higher for the business owner — the owner is emotionally tied to each decision, which can narrow his or her thinking. The only variable that’s different is you, so you must find the right adviser so you leave no stone unturned.
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