Independence Day. A day to celebrate American virtues like life, liberty and the pursuit of happiness. While we don’t hold a monopoly on entrepreneurship in this country, both the dream and reality of small-business ownership are part of our national identity. America is still a place where you can start small and finish big.
Starting and selling a business actually have several things in common. One of those similarities has to do with your “why.” The primary motivator for selling a business is often the same thing that made us take the leap in the first place: Freedom.
The original small-business freedom: Time
The two types of freedom most often associated with small-business ownership are financial freedom, and freedom over our own time. For many of us, it starts with the latter desire to be our own boss.
I spent a decade working in corporate America — mostly at wireless telecommunications companies — before Chris and I launched our first business in 2003. My tenure in the wireless industry was marked by a flurry of historic mergers and acquisitions. I was laid off in two of them. I also got laid off from a VC-backed internet startup in Seattle when the dot-com bubble burst in 2000. That makes a grand total of three times I’ve been handed a severance check and shown the door. 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 whenever I pleased.
Freedom comes at a price
Freedom, however, can be more elusive than simply being your own boss. Fast forward a few years and many of us find that “living the dream” of small-business ownership comes with the at least a few nightmares. Who among us hasn’t wanted to fire ourselves — or quit — on more than one occasion?
The liberties associated with small-business ownership come with all kinds of costs including financial risk, legal accountability and ultimate responsibility for…everything. Most business owners confess to working more hours for themselves than they ever worked for an employer. It may be years before you can take a two-week vacation from your business. Even if you’ve achieved the owner’s holy grail of operational irrelevance, it can still feel like the business has a hold on you.
The time vs. money trade-off
In one of the great ironies of entrepreneurship, freedom is typically the biggest motivator for both starting and selling your business. No matter how successful, most small-business owners eventually long to be free of the constant worries and pressure – burdens they have gladly borne, but are ready to pass on to someone with new energy and ideas. Just like in the beginning, you’re back to wanting complete control over your time and what you do with it.
Selling your business may also come with a newfound liberty: Financial freedom.
If you want the biggest possible payday when selling your business, get ready for a sprint to the finish. Getting top dollar from the sale of your business typically requires intentional planning and preparation. (We recommend 6 to 36 months depending on your situation.) If you’re relying on the proceeds from a sale to fund all or part of your retirement, it can be well worth putting your freedom on hold a bit longer to make sure your business is sale-ready.
Keep in mind that there can be a trade-off between time and money when it comes to selling your business. If you want freedom over your time ASAP (i.e. a quick sale with little to no preparation), it may cost you in the form of a lower valuation and ultimate selling price.
When it comes to small-business ownership, the freedoms gained are often worth the fight, the risk, and the sacrifice. When you think about leaving your business, consider the two types of freedom: financial freedom, and unlimited free time. Does one take priority over the other? Are you willing to put in a little more time and work to get both? If not, what trade-offs are you willing to make?
Regardless of your timeframe for selling your business, start planning today. There’s no downside to owning a sale-ready business. Freedom awaits!
Got questions? We’re here to help with the answers. Contact us to get the conversation started about selling your business.
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.