Earlier this year, I facilitated a retreat for a group of business owners to talk about how to know when it’s time to sell their business and retire and how to navigate that transition without regrets.
One of them I’ll call “Brian” announced he had no plans to retire – “Not me,” he said. “I’m planning to die at my desk.” When I asked him why, he responded, “Because it’s the only place I feel truly alive.” Ouch. I wondered what it must be like to be his wife or children and know that the place he felt most alive was at work, not with them.
Last month, Brian died quite suddenly, and his wife, Barbara, told me “My husband thought it was a joke to say he’d ‘die at his desk and leave me wealthy and in charge of the business.’” Her voice broke. “It was no joke when my ability to grieve his unexpected death was sidelined by all the clients, staff and vendors who needed my attention. The reality according to our advisors is that the estate will receive only a fraction of the business’ worth and, if he wasn’t already dead, I’d kill him for leaving me in this mess.” The sad news is that this was avoidable.
Another executive at that same retreat said he was delaying the sale of his business because he was afraid of running out of money. A third said that he had heard too many horror stories about company owners who dropped dead right after selling their companies and he had no intention of becoming one of them who died of boredom.
I pushed back a bit on these fellows – what if the reason that an owner died shortly after selling his business wasn’t because he sold too soon but because he sold too late? Perhaps he waited until his health was failing and “had” to retire. As for dying of boredom, I asked them to consider the state of their relationships in the context of research that shows loneliness is as bad for your health as smoking or obesity.
Steve Croft shared a brief anecdote that his 60 Minutes colleague Morley Safer had warned him “Don’t stay too long, Steve”. Morley died of pneumonia at age 84 one week after retiring after 46 years at the show. Think he might have stayed too long? How is it that you think you’ll “just know” when he didn’t?
Retirement Feels Like Death to Me
Retirement is 10th on the list of the top 50 most stressful life events (according to the American Institute of Stress) – 6 points above financial stress – but in the same decile as things like death of a spouse (or a child) and divorce. It’s actually no surprise that we find retirement, death and divorce in the same stress bucket. They’re all transitions and, transitions can feel stressful, especially when we don’t talk about and prepare for them. But, the truth is, it doesn’t have to be this way.
More than sixty percent of business owners think they will “know” when it’s time to retire and will be able to plan for a sale when that time comes. As a consequence, fewer than thirty percent of business owners have an exit strategy or succession plan in the event of their unexpected departure or death. Many of them play the “One More Year” game, assuming that time is on their side and that they can safely continue to delay the inevitable.
The problem is that there is a significant disconnect between when people THINK they’ll retire and when they ACTUALLY retire. Almost half of the population (48%) incurs an unplanned retirement event – often to cope with a health problem or disability of their own or to care for a spouse or other family member. That’s a huge problem.
The reality is that every owner will leave their business, with or without a plan.
The result is that in an effort to maximize economic security by focusing our attention on “getting just a bit more” we perpetuate the twin myths of “Time is Money” and “I’ll Know When It’s Time” ignoring a huge risk. Then, when an unexpected departure happens, the capacity and stamina of those who need it most to get through a transition is significantly diminished. The result is that the failure to plan for an inevitable transition ends up leaving everyone affected traumatized and with an even greater loss of security and confidence in the world around them.
Ask yourself, “Does continuing to own your business really keep ill health, death and boredom at bay?”
Ironically, perhaps the best time to sell your business is when you don’t have to! You cannot expect a good deal when your back is against the wall. Most business owners hesitate to sell when the times are good or to even contemplate their exit. Selling when there is no other option understandably gets you a less-than-enviable deal. Any issue such as the business owner getting burnt out, the owner having health issues and/or the business losing a key customer can make a business virtually unsellable, or sellable at a much reduced value.
A burnt out or unhealthy owner does not have the energy and will that’s necessary to keep the business growing and expanding. Little effort is put in to seek new markets and tap into new customer bases. The staff may become uninspired, the key customers may head elsewhere and the business may lose its wings. Buyers aren’t interested in buying businesses on a downward curve. Many business owners find themselves in similar situations and are forced to sell from a place of weakness, all because they thought they’d know when.
Your retirement plan may completely depend on a successful sale of your business. If so, you cannot let your declining energies bring down the value of your business. It is important that you recognize the right time to sell your business and put it up for sale when it is still going strong and you still have stamina. Buyers are not only interested in stability; they are looking to buy businesses that are likely to grow in the future.
Think you’ll “know” when it’s time? Think again. And, then make a plan to begin the journey toward exiting your business without regrets.