By JIM KENDALL
This material originally appeared as one of Jim’s Daily Herald columns
How long will it take to sell your business? There are seven basic factors:
* The price you set, which should be based in part on your determination of how many dollars you will need to take your next lifestyle step, especially if selling is retirement driven.
* A professional valuation of your business, which may result in a different price than you want.
* How long it will take to correct any issues the price-setting process uncovers.
* Interest rate levels, assuming the buyer borrows some money.
* The state of your industry.
* The tax climate.
* The economic outlook.
And then? “No one has a crystal ball that can predict the next year – or the next quarter,” says Barry Goodman, whose Chicago-based Birkdale Transition Partners LLC helps small business sellers prepare for the day after the sale’s closing. “My attitude is that if the numbers are right, and if the seller is ready mentally, do the transaction.”
There is a tendency to assume that small business owners considering selling are Baby Boomers ready to retire. The oldest Boomers are nudging into their 70s, after all.
There’s truth in that assumption, but it’s worth noting that the youngest Boomers are in their 50s – and probably not ready to retire even if they are ready to sell. The approach for younger owners may be a strategic merger, blending their business with another to generate more growth.
The “how long” question remains, however.
Goodman typically signs on for six to 18 months. He’s not a broker or banker; Goodman’s forte is the planning that will help sellers (mostly retirement age) avoid becoming part of “the 75 percent of owners who within six months regret selling because they have nothing to do.”
The earlier a combination of financial and life planning begins, the better. Tad Gray, a certified financial planner at Financial Solutions Advisory Group Inc., Chicago, points out that when transactions fall apart “It’s often not a deal thing. It’s emotional. The couple hasn’t talked about what they really want.”
Goodman notes that investment bankers increasingly “put the owner through an assessment to determine the seller’s readiness for selling the business.” The reason? As Gray notes, “Deals fall apart at the closing table.”
Goodman seeks to bypass that scenario by working with his clients to develop a business plan for retirement. “What will give you purpose?” Goodman asks. “Sit on the board of a company? A charity? Start another business?”
If the business seller’s answer too often comes back to visiting the grandkids, golf and travel, Goodman repeats his question – as many times as necessary to direct focus to “what will get you out of bed in the morning?”
The resulting business plan is “reduced to writing,” Goodman says, because the process of committing a retirement plan to paper helps selling owners focus. “It’s goal setting,” Goodman explains. “Business owners are good at that.”
© 2017 Kendall Communications Inc. Follow Jim Kendall on LinkedIn and Twitter. Write him at Jim@kendallcom.com. Listen to Jim’s Business Owners’ Pod Talk at www.kendallcom.com/podcast.