Many business owners who sell or exit their businesses experience ‘seller remorse’ because they had no vision of how they could spend their time and money away from their privately-held business. In fact, many owners count the days until they can get back into the business that they recently got out of. Today’s article is written with the intention of focusing your attention on this important issue so that you can exit your business – via sale or otherwise – in a manner and a time period that accommodates your personal needs because you have a plan of what you will do after your exit.
The Mindset of the Average Owner-Operator
Most owner-operators of private businesses see their role in life as very simple. They think that the highest and best use of their time is either (i) producing more of what they make or do in their business, or (ii) selling more, or refining the sales process and customer experience for their business. That’s it.
There is little more to the mindset of the average business owner than constantly improving and selling more of what they do or make with their businesses.
Is this a problem? Why would a business owner concern themselves with more than these simple formulas for success for their business?
The answer is that when growing a business this is often the exact mindset that is required for success. However, when planning an exit, it takes a better understanding of what will fill one’s days. When proper consideration is not given, it can lead to the trap of the 1096 day problem.
Non-Competes, Seller Remorse and the 1096 Day Problem
Owners who exit their businesses via sale (or otherwise) will often-times be asked to sign an agreement that they will not compete with the new owner of their business. This agreement is called a non-compete agreement and many times exiting owners do not fully comprehend the issues related to this important document which prevents them from working in the industry where they have built their company and reputation and have had significant levels of success.
Oftentimes, as an owner is anticipating the closing of their transaction – ready to be paid millions of dollars – they will not have any idea of what they will do after their exit. Despite this fact, they are signing an agreement not to compete with their buyer. The average non-compete agreement requires that the owner stay out of their industry for three (3) years. 1096 days, therefore, is equal to 365 days, times three (3) years, plus one more day – that is the day which represents the very day that the owner can ‘legally’ go back into business in their industry.
When it is time for your exit, will you be counting each of those 1096 days or will you be ready to find other ways to challenge yourself and fill your days?
Why Did You Get Into Business To Begin With?
One of the best ways to avoid seller remorse is to design a successful exit plan that transcends the making more of and selling more of what your business produces today. This process includes thinking back to why you originally got into business for yourself. Long before you got caught up in the challenges associated with managing and growing a successful business, you had an idea of what life would look like once you had a successful business and a high level of independence.
The average business owner forgets their original ideals behind getting into business for themselves because they were, early on, inexperienced with the ever-growing demands on their talents and resources that a growing company requires. This leads to a habit of working extremely long hours, days, weeks, months and years as the seemingly endless needs of your business pour into your office on a daily basis.
But is this what you counted on when you set out on your own? Is this what you had in mind when you started your business? Should more of this behavior be your reward for business success?
Invariably there was the joy of success and the thrill of facing and overcoming difficult challenges in your business over the years. However, do these victories represent the type of freedom that you had in mind when you undertook the challenge of business ownership?
What is Freedom for You?
Every business owner has a different definition of freedom. To some it is the liberation from their personal guarantees to banks. To others it is the ability to come and go as they please, working only when they want to. And for others, freedom represents the respect and security that comes from owning and running a profitable private business. When building your exit plan, you want a new definition of freedom. This begins with how you will fill your days after your exit.
What Activities Will You Participate In After Your Exit?
One of the best ways to begin planning for your exit today is to make a list of all of the things that you have wanted to do but that you never got around to because your business has kept you too busy.
Do you want to travel more? Spend more time with family? Begin a charity? Donate your time to certain causes? Or do you simply want to schedule golf seven days a week and do some part-time consulting in your spare time?
What would your days look like if you were doing exactly what you really want to do?
Can you envision this new type of life and see yourself doing these activities?
The Critical First Step
Walt Disney said it best . . . “if you can dream it, you can do it.” Or take the alternative approach which is true for most owner-operator business owners . . . “If you cannot dream it, it almost never will become a reality.”
The critical first step is to envision your life beyond your business and to begin to put pieces in place to make this happen.
Begin a calendar with future dates and start to fill in how you would spend those days if you were not running your business. See yourself living that life and you will be one step closer to making it happen.
All Owners Face This Challenge
As you begin to alter your thoughts towards your exit, recognize that all owners face this challenge – you are not alone. It is however your responsibility to make these important changes for yourself. Once you begin to do so, you will see how your current day-to-day existence is quickly transformed to a new reality for your successful exit.