Selling a business is more than just a business transaction. It has significant personal financial implications that need to be planned for, says Mike Nikolich, former business owner of Tech Image and current CMO of SmithBucklin.
He gave this tip in a recent interview with Marian Cook founder of consulting firm Business Transition Experts as part of a series of interviews on “Selling Your Business for More”.
In this extract from the interview he explains the situation in more detail.
What were the personal financial lessons learned from selling your business? What advice do you have for other exiting business owners?
The biggest mistake I made is that I should have assembled a much stronger team of financial advisors both before during and after the sale was consummated. I really didn’t think about that. And I bet you most entrepreneurs don’t.
People can rely too much on their internal talent or a friend who has served as their accountant for years, but you are really talking about a completely different transaction. You need people who specialize in that.
It is so critical. In the movie, The Candidate, with Robert Redford, he goes through the whole election process to become a state senator and he wins. He’s eventually sitting there with his campaign manager. And as we fade to black he looks at his manager and says, now what?
That perfectly summarizes how I felt, because I really hadn’t thought about tax implications. I really hadn’t thought about what I was going to do with this lump of money I’m going to get. How do I invest this? I hadn’t thought of any of that.
Luckily, I had been managing my portfolio for years so it wasn’t that big of a transition for me. But I would still like to have had a team in place because I’m sure I left money on the table that I didn’t need to.
You can’t be afraid to have an exit strategy. I was scared to admit my exit strategy for the first seven, eight years in the company.
The exit strategy was to sell the business. There really wasn’t another exit strategy. And I don’t know why I was afraid to put that on paper. I think I thought that everyone would quit.
I realize now that you should treat that whole exit strategy as though it almost needs a business plan to itself. You need to think about what kind of advisers you’re going to be working with – what type of attorney, financial advisers and accountant.
Rather than feeling I had a smooth transition, I feel like I kind of bumbled my way through it, much like I did the first couple years I ran the business.
In fact about 70 percent of business owners don’t have exit plans in place. And if they have, it may simply be to bought by somebody.
That’s thinking only about the business transaction, not about the personal implications financially once it is through. But, as business people, we can be too focused on the deal itself and not what it means personally, financially, to ourselves and our families.
For this entire interview as well as those of 14 additional world class experts on selling a business, please visit our Business Transition Experts “Education at Your Desktop” site at: http://www.businesstransitionexperts.com/telesummit .
