As baby boomer entrepreneurs age, many more of them are moving toward an exit plan for their business. One of the biggest mistakes an entrepreneur can make when engaging in exit planning is forgetting that there are actually two exit events.
The first exit involves the business itself. This is the exit that gets most, if not all, of the attention.
The entrepreneur begins to prepare the business to be sold. To increase the value of the business, the entrepreneur works to maximize cash flow, develops a strong business plan to make a case for its future value, and tends to any parts of the business that might cause concerns to a prospective buyer.
When we sold our business, it reminded me a lot of getting a house ready to sell — only a lot more complicated and much more stressful. But the goal was the same: Make it look as attractive as possible to a buyer and help the buyer imagine what it would be like to own it.
The final piece to put in place for the first part of the exit is a team of experts in this type of transaction — attorneys, accountants and business advisers with expertise in the exit process.
But none of this preparation work, and most often very little of the attention of your team of experts, addresses the second exit event. While the first exit event is about the business, the second one is about the entrepreneur.
While the entrepreneur may play some transitional role in the business after it is sold, at some point he or she must personally exit the business. This is that second exit event.
For many entrepreneurs, this can create an unexpected emotional response.
The business that had become so much a part of their life is no longer theirs. This can create a tremendous feeling of emptiness inside the entrepreneur. Owning a business consumes every waking moment of your life and can in many ways define who you are. But suddenly, it is now gone.
I had this feeling after we sold our business. I tried to fill up this emptiness the only way I knew how: I was already planning the next business as we were winding up the sale of our current venture. Thankfully my wife slowed me down and helped me take time to discern what to do with the next stage of my life. That is how I got back into teaching.
Baby boomers who are working toward their exit events need to not only attend to the plan for selling their business, but also make a plan for what they will do once that business is out of their life.
“I will spend more time with my family” or “I will play more golf” is not a plan.
Baby boomers currently developing their exit plans can expect to live 15 to 25 years after they sell their business. Find a purpose and a passion. Then put the same level of effort and thought into planning the next stage in life that you put into planning your entrepreneurial journey.