“I’m miserable” was the reply Tom gave me when I asked him how things were going. This was not the reply I was expecting. I know Tom through his brother and I see him from time to time while we’re out walking our dogs.
I knew that Tom had sold his metal fabrication business last year. He’s 62 years old, married, two adult kids, and no grandkids yet. I didn’t know how much debt he had but knowing a little about Tom’s frugality, probably not much. His brother told me that the sales price was close to $12 million so I knew he received a very big check. Ride off into the sunset, wake up everyday and do whatever you want type of check.
“Why are you miserable?”, I asked him. “Golfing gets boring” was the reply. I know that Tom loves golf but the picture was starting to become clear to me. Though he now had ‘do whatever you want everyday’ money to last through his retirement, he hadn’t really thought through what that would look like. It’s a common mistake that leads to dissatisfaction. When you step back and think about things, it’s not hard to see why.
Tom is a hard charging, entrepreneurial leader who built his company over decades of work. He thrived on the daily challenges, people, and decisions involved in running and building his company. He was tired of the grind, yes. Golf, laid back living, and European vacations looked great. But business leaders need purpose. The sale is really just a part of a successful transition. In order for there to be satisfaction, it needs to be a transition with purpose. And figuring that vision takes thought and planning.
Envisioning and writing out a personal plan for what post-business life will look like is the place to start. In my own practice, we sometimes get resistance to this step from clients because it seems too ‘touchy/feely’. We know it’s vital though and insist on it getting done. Without taking the time to think about what you really want, you can succumb to the brochure version of retirement vision.
Google ‘retirement’ and look at the images. Lots of beach chairs, sailboats, and golf. Those things are all well and good but there needs to be purpose. Business owners need engagement, passion, and involvement. Sometimes it’s starting another business. It could be a charitable interest. Maybe it is serving on the boards of other businesses. Oh and of course there’s plenty of time for beaches, porches, golf, and grandchildren too. Just think things through and put it in writing.
Chances are not good that you will discover your purpose without forethought. According to the Exit Planning Institute’s Readiness Survey, 75% of business owners “profoundly regretted” selling their business 12 months after finalizing the deal. Keep in mind that most businesses that get put on the market every year do not sell. So these are the successful ones. They have succeeded in transitioning their businesses and they now have the resources to live the life they want, leave the legacy they want, and yet they are not happy with the sale. In my experience in working with business owners, this is almost entirely an issue of not having really thought through what their next act will look like. What can be done to change this outcome?
Resist the urge to jump right into the numbers. Successful business leaders are naturally very good at analyzing business performance and numbers. Decisions need to be made about how to allocate resources and time. “What’s the bottom line?” sort of summarizes the mentality. So why resist this? Because before you were good at managing your business, you had a vision, an idea about what this business model would be all about. You solved some problem for your customers. You created an enduring competitive advantage. You figured out a way for it to make money. Your personal plans need the same type of bold thinking and vision.
In my work with business owners, we go through very detailed questions. We stay in the questions until answers become clear before moving on to the numbers. The questions cover the big things like values, goals, process, interests and relationships. It’s necessary to dig deep because if this work is done, it creates alignment with your financial and business objectives.
Your personal goals necessarily need to drive the bottom line things like how much money you’ll need for your next act of life. Knowing how much you’ll need can then drive how you run your business and what plans you make for an eventual transition.
You can go through this process yourself. Think about who are the people that matter the most to you. What exactly do you want to be doing? Again, write out your plans in detail. You can think about what type of legacy you want to have. Legacy is not only about money but certainly includes it. Once you have a sufficient amount of detail, you can figure out what all of this is going to cost.
Now the business strategy can be designed around the owner’s personal objectives. In the case of Tom and most entrepreneurial business owners, it is the other way around. This is backwards and cannot create alignment. This may not be true for very large companies but it is for closely held family businesses. There is an overlap between business and personal in the closely held company that cannot be ignored. Personal and family objectives need to be driving the decisions and they cannot unless they are defined.
It’s never too early to start this process. Take the time to develop personal vision for your next act of life. It may seem far off. If you don’t know how, get help. Aligning your personal goals with the business goals will help you craft better business strategy. Your life deserves at least the same level of vision as your business. Your satisfaction depends on it.