Most Businesses Aren’t Sold for Financial Reasons

by | Mar 16, 2021

Whenever a business owner is contemplating the sale of a business, the only discussion topic is money. However, most businesses are sold for non-financial reasons. The business owner gets fed up with the headaches or simply loses passion. The money is simply a “cherry on top” to make the psychological BS stop.

If you have ever owned a stock that is taking a nosedive , you know this feeling. At some point, you just want to stop looking at the chart going the wrong way, so you sell…right at the bottom (at least I do). Why would a savvy business person sell at the absolutely (no hyphen) worst time? Because it’s not about the money;  it’s about making the psychological pain  go away.

So, what’s my point? I want you to separate the financial aspect of selling your business from the psychological aspect. Selling your business is one of the most important decisions of your life, so let’s get it right. Once you separate these aspects, you can make a better decision.

Let’s run through some of the common psychological reasons business owners bail out.

  1. They’re tired of the BS . This one is the closest to dumping a stock. If the stock is bad, dump it. If you are fed up, it’s time to rethink things. Your business produces income. It has a brand and equity. Separate the personal from the financial. Ask yourself, “If I could shed the BS , how would I feel?”  Frankly, most business owners cannot even imagine the BS  going away. Try. We have seen many business owners who work two half (no hyphen) days a week and have a viable business. If you could do that, would you feel the same way?
  2. They’ve lost their passion. I own a mining stock and I’m not that passionate about copper. There is an unspoken presumption here – the business can’t make money if  you’re not passionate. That isn’t necessarily true. It may be true that the business may not grow without your passion. It also is probably true that the business will suffer without it. However, will the business continue to earn money without it?
  3. They don’t have the energy  they used to. That makes two of us. Does the business need your “work” or does it need your guidance, expertise, and leadership? I’m inclined to think that your wisdom is worth more to the business than your toil. Imagine separating these two.  If you could give your wisdom but not your toil, would you sell?
  4. Your  partner wants to spend more time with you . This is a common concern for many business owners, and again, it’s predicated on the assumption that business ownership and the job of CEO are one. They are two independent functions, but most business owners combine them. We can own stock in Google without showing up for work. Why can’t we enjoy the benefits of ownership in our own company without the pressure of a job?

There is no one-size-fits-all solution for transitioning into retirement. However, I do encourage you to explore every option before making this life-altering decision. I have seen many business owners find a way to keep their business income but shed the daily hassle of business ownership. Before selling, I encourage you to strongly consider this option as a viable way to maximize the enjoyment of your Golden Years.

 

 

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