So, you’ve decided to sell your business. Whilst you may be sure that it’s the right thing to do, it can still be an incredibly challenging decision. After all, you’ve likely poured countless hours into creating a successful business.
One of the challenges you may be facing is how to know how much is ‘enough’ when accepting an offer. There are numerous ways to look at it and various calculations can lead to very different results. But we’re going to look at it from the perspective of you; how much do you need to achieve your goals?
Your lifestyle after selling your business
Why have you decided to sell your business? Perhaps, you’re ready to take a step back from work and relax. Or maybe you’re ready for new challenges and have another business idea.
Whatever your reasons behind the decision, it’s time to start thinking about the lifestyle you want after selling your business. This is an opportunity to think about aspirations and what you want to achieve. Consider the big plans you have in mind, as well as the day-to-day lifestyle you want.
This can help give you a figure for how much money is needed to create the lifestyle you want as you start the next chapter of your life. Working out the average annual income you need to reach lifestyle goals can give you a sum to keep in mind as you negotiate to sell your business.
If you hope to retire, it’s important that you have enough to live on for the rest of your life. Whilst if you’re simply planning on moving into a new venture, you may just need enough to tide you over until you start earning another source of income. Your lifestyle plans should play a pivotal role in assessing if an offer is ‘enough’.
It can be difficult to work out how much you need to reach your goals. You may need to plan several decades into the future and factor in other areas such as inflation, investment performance and other assets. This is an area we can help with. By modelling your lifestyle outgoings, we’ll help you visualise how different sale prices will have an impact on what you can achieve.
Look at your business objectively
Whilst your personal goals are important, you need to look at your business objectively too. After all, it’s only worth what someone is willing to pay for it.
Over the years, you may have built up an emotional attachment to your business, especially if you’ve taken it from the beginning stages to success. But creating a realistic selling price is crucial when marketing your business. It’s worth taking some time to get all your paperwork in order to show the business and its prospects in the best possible light. Here, it can be useful to seek outside help. When evaluating your business you may overlook certain aspects, including potential opportunities, as it can be difficult to assess it from another perspective.
Is it worth waiting for a larger offer?
This is a conundrum that some selling a business face. A potential buyer has offered you a sum for your business, it’s less than what you think the business is worth. But it is enough for you to achieve your lifestyle goals. So, should you accept?
Of course, there’s no right or wrong answer here and numerous factors will influence your decisions. However, you should consider what it means for you. Waiting for a higher offer could take months, or never come at all. Is it worth giving up more of your time and efforts for?
The size of the gap between the offer and your hopes, as well as the reasons for selling your business in the first place, will undoubtedly have an impact. But this is where understanding what is ‘enough’ for your goals can come in useful. It means you’re able to confidently negotiate offers knowing what it means for your future.
How we can help
We’ve already covered how we can help you figure out how much is ‘enough’ for your aspirations when selling a business. But financial planning shouldn’t stop there.
Following the sale of a business, you’ll have a lump sum of cash to turn your dreams into a reality. What should you do with it? Careful financial planning can help your money go further and give you peace of mind that you’re making decisions that are right for you. Ongoing financial advice that reviews your plans, including where aspirations may have changed, can really add value to ex-business owners. Contact us today to discuss your personal situation and how we can help.
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