There are times and events that get me pondering American virtues like life, liberty and the pursuit of happiness. While we don’t hold a monopoly on entrepreneurship in this country, we are known for having the pluck, determination and societal underpinnings that can turn a dream into a million-dollar reality.
In one of the odd twists of business ownership, the process of selling your business can be similar in many ways to starting it. One of those similarities has to do with your “why,” as the primary motivator for selling is often the same one that made you take the leap in the first place: Freedom.
Before starting my first business in 2003, I spent a decade working in wireless telecommunications. There were a number of years when the industry went through a flurry of mergers, and I got laid off in two of them. I also got laid off from a dot-com venture in Seattle when the bubble burst in 2000, so that makes a grand total of three times I’ve been given the boot. When I became a business owner, part of the motivation was to never again feel like someone else was controlling my destiny. I wanted the freedom to choose my own hours, work from anywhere and take a vacation for as long as I wanted without approval from anyone. (I’ve also wished I could fire myself on more than one occasion over the years, but I digress.)
Of course, the dream of business ownership is often different from the reality.
After you’ve been a business owner for a while, you realize that freedom is more elusive than simply being your own boss. Along with certain freedoms, business ownership brings with it absolute accountability and a never-ending list of responsibilities. In fact, most business owners confess to working more hours for themselves than they ever worked for someone else. While we have the freedom to meet our kids at the bus stop every afternoon, Chris and I went without taking a real vacation — as in lounging on a beach (unplugged) for at least week — for almost a decade. Even if you’ve achieved the holy grail of operational irrelevance at your business, it can still feel like the business owns you.
It is one of the great ironies of small business that freedom is typically the biggest motivator for both starting and then deciding to sell a business. After years spent as a business owner, most people eventually long for freedom from the constant worries and pressure – burdens they have gladly borne, but are ready to pass on to someone else. Just like in the beginning, you are interested once again in having control over your time and what you do with it.
Selling may also represent a newfound liberty: financial freedom.
The Money Versus Freedom Trade-Off
If you want the biggest payday possible when selling your business, you’ll likely have some work to do. We tell clients to expect it to take about a year to sell their business. Transactions also tend to be more successful – and more lucrative – when you prepare the business for sale before putting it on the market and looking for buyers. In other words, if you want to get maximum value for your business, be prepared to put your freedom on hold for a year or two. Alternatively, if you’d rather have your freedom immediately (i.e. a quick sale with little to no preparation), it will usually cost you in the form of a reduced value and ultimate sales price for the business.
When you think about leaving your business, think about that combination of time, money and freedom in your life. Does one take priority over the others? Are you willing to put in some work to get all three? If not, what trade offs are you willing to make?
Give us a shout when you’re ready to start the discussion. Freedom awaits!
Author: Barbara Taylor
Barbara is co-founder of Allan Taylor & Co. and a former New York Times blogger. She has been a small-business owner since 2003. Barbara lives with her husband, Chris, and their two sons in Northwest Arkansas.