The papers have been signed. Money has changed hands. The deal is done. But once you sell your business, the work of getting on with your life has just begun.
After years of building and running a successful business, many business owners seem lost when it comes to continuing on with their lives. They may understand the financial issues they face after the sale of their businesses, but many arent prepared for the psychological and emotional traumas they may experience. Many experts equate the sale of a business with putting ones child up for adoption.
This is how many former business owners feel; therefore, its not surprising that, when its your turn to sell your business, you may have difficulty with some or all of the following:
1) An identity crisis For many years you were the business and vice versa. Once that business is gone, you may not know how to introduce yourself. The question is, what do you call yourself when you are not the president of XYZ Co.?
2) Loss of control For years, you have managed employees. Who will you manage once the deal is done?
3) Transition issues Will you be able to step aside and let others run the company while you gradually ease out of the business?
4) Social adjustments When the business is sold and theres a large influx of money, you may find yourself immensely popular with charities and people selling investments. At the same time, you may start to lose your former industry friends. These are the same people who were a big part of your life when you were at the helm of your business.
5) New social circles With newfound wealth, many will upgrade to a more affluent neighborhood and try to develop friendships with people who may not share the same values. This can be disappointing to someone who is starting a new life.
6) Unrealistic expectations Many former owners fail to calculate taxes on after-sale proceeds and are shocked when they dont receive what they thought they would from the sale of their business.
7) No more expense accounts Once the business is sold, the things that used to be paid through the business, such as health and disability insurance, club memberships, meals, business trips, vacations, etc., must now come from your own pocket.
8) Lack of investment knowledge Many former owners probably reinvested their money into their own businesses. Now they have to invest in the financial markets, which they frequently dont understand, to keep their money growing.
Despite such changes, the situation is not as grim as it might seem and can be viewed as a new opportunity. The following can help former business owners transcend their old lives for something much more exciting:
Rent an outside office and spend time there at least a few days a week. This will give you a chance to tie up loose ends while preserving your familys sanity.
Postpone any major decisions regarding investing in the securities markets or purchasing another business for the first year after the sale. Sometimes, it is better to research options thoroughly than to rush into something without a great deal of thought behind it.
Take a family vacation. Taking time to play is a reward for many years of hard work.
Consider volunteering in local business organizations that help small businesses or in the businesses themselves. Part-time and full-time opportunities for pay sometimes are available for consultants, boards of directors and advisory boards.
Louis P. Stanasolovich, CFP, is founder and president of Legend Financial Advisors, Inc., a fee-only Securities and Exchange Commission registered investment advisory firm located in the North Hills. Reach him at (412) 635-9210. The firms Web site is www.legend-financial.com.