Note to reader:
Dear reader, thank you for sticking with me as I begin to build a base of readers. It’s been nearly a year since I’ve started this newsletter, and I have yet to get tired by it. I enjoy sharing insights with you from market related topics to behavioral finance. Much of what I do as a financial advisor is precisely that, so it never gets old, and I hope it has made you more informed in the process. As I prepare for the coming year, I would like to let you know of a coming shift. My practice is largely focused on business owners and retirees and so, being true to who I love to work with, my content will begin to reflect issues those demographics face more pointedly. Before you unsubscribe, please read this newsletter and get a taste of the new format for yourself. It’s my hope you stick around, even if you don’t own a business or are retired, as I think there will be much to glean from.
Your baby is ugly.
If you want to start a fight in four words, that’s how to do it. Recently, I had to tell a business owner those four words. Figuratively of course – their children are beautiful. Their financial plan, and in conjunction their business, was not.
If you’re a business owner, you are likely preparing for two things.
- The income from and the sale of your business will fund your future retirement.
- You’re preparing to get top dollar for your business.
But you have no idea what your business is worth, really. Leaving the key component of your financial plan with an asterisk over it. According to the Exit Planning Institute1, 80-90% of a business owner’s net worth is tied up in their business. So if your financial plan is to sell your business, ensuring you take the appropriate measures to secure your family’s future is a non-negotiable.
In today’s newsletter, I want to go over three key factors to consider in determining whether you and your business are ready to take that next step.
Personal Readiness
There’s a reason why we start with personal readiness. It’s easy to jump right to the sale of the business for the highest dollar amount possible, right? But in reality, you’ve got to know if you’re financially able to step away, and even more importantly personally willing to step away.
Quote: “Retirement is wonderful if you have two essentials—much to live on and much to live for.” – unknown
Under personal readiness, the core question you will want to answer for yourself a few questions:
- What is my motivation?
- What am I leaving to?
- How will I find fulfillment in my next chapter?
If you are running from something, you’ll end up regretting it, because on the one hand you’re not adequately addressing the core motivation, and on the other hand you have no clear vision of what your next phase will look like. Nearly 76% of business owners who sell their business regret it within the first year.2 Partly because we business owners have “achievement” addiction, and unless that is appropriately prepared for and channeled, you’re going to have an issue.
To have a successful transition you must be armed with knowledge. Knowledge about yourself, and knowledge about your business.
Financial Readiness
Business Readiness
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