When owning a business no longer fits your lifestyle

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As more people get vaccinated and fewer COVID-19 cases are reported, things seem to be getting back to normal. I can see CEOs and business owners’ eyes light up as they talk about the number of company reopenings, workers finding work, and buyers visiting stores in person.

Even so, it could take a long time for many companies to get back to normal before COVID. Business leaders want steady profit growth, reliable on-site employees, and high productivity. However, it is difficult to recover after a year so far from normal.

Before the pandemic, many owners and CEOs had their companies and roles set up not only to generate income but also to suit their lifestyle. They had expected a degree of freedom and financial security. Or if the business wasn’t set up like that yet, it was probably the long-term goal. After years working in the company they founded, entrepreneurs rightly want the money and time to live the way they want.

But then came COVID. Suddenly, CEOs and owners had to wear more hats and work harder than ever just to keep their businesses afloat and maintain its value. They saw their dream life getting further and further away. Now, despite increasing signs of normalcy, some of these entrepreneurs have had enough and are ready to move on.

If you have a lifestyle business or role that no longer fits your lifestyle, there are three options to consider:

1. Appointment of a successor
A successor would allow you to cease running the business, and this could be done without a sale, in order to keep you in financial control. Ideally, there is someone within the company that you would like to take over one day. This would allow for a quick transition when the person is up to the task.

Unfortunately, especially in smaller companies, the second in command can be a good addition to the entrepreneur, but not necessarily the best choice as a successor. This can lead to a number of questions when choosing your company’s next executive:

  • Is there an existing employee who could be trained to eventually take the reins? Or do you have to search to find the right candidate?
  • How long can it be before the person is ready to take the reins of the company?
  • Does the CEO or owner have the time to train this person?
  • Will this role as “CEO in training” require a raise – or an extra salary if it’s a new position – and is that financially sustainable?
  • What if the person doesn’t exercise or chooses to leave?

Sometimes companies have the right person in the house or delegate management responsibility to a family member. In other cases, the process takes years and can be costly. It is crucial for owners and CEOs to describe what qualities and skills are required in order to find the best solution for their business.

2. Scale down

Another way for a business to better suit the owner’s lifestyle is to deliberately downsize. With less volume, of course, there is also less to handle. However, that doesn’t mean it’s easy.

Downsizing requires reducing several aspects of the business so that there are fewer customers, lower expenses, and fewer staff. This, of course, leads to lower profits overall – but without salaries, rent and other costs, the owner can still earn a strong income that supports the way he wants to live.

As a smaller business, there is a need to consider how important each customer becomes. When the customer list is tight, losing a customer will significantly affect your bottom line. It will also take more time and energy to replace that income. It can be good to seek objective advice on what to keep and what to let go, and how this will affect your and your company’s reputation and plans for the future.

3. Sale of the company

If CEOs and owners aren’t interested in finding a successor or downsizing the company, but still want something that offers a freer lifestyle, it may be time to consider selling the company. This can seem like a dramatic decision, but the process takes time and the owner may need to stay for a few years to help guide the transition.

The first step is to think about what type of buyer might be the best option to acquire the business. Most salespeople want a person who can keep growing the business they started. It can be one or more people in the early to middle stages of their careers ready to run their own business. Perhaps a competitor – or even a current customer – is ready to expand and would gain an advantage by taking over your business. Another option is to bring in an investment group who could team up with a seasoned executive to run the business.

It pays to work with a professional advisor who can match your goals with the right buyer. Find someone who can answer your questions, advise you on how best to position the company for a sale, and help you make strategic connections. Without this objective person to lead the way, some entrepreneurs can take up an offer that harms the business and costs them money – further jeopardizing flexible lifestyles.

Example of a lifestyle change

I have worked with many owners who have sold their business and, on the other hand, have come out stronger. For example, a company in the hotel industry was hit hard in 2020, mainly due to the decline in travel resulting from the pandemic. The owners took the time to think about the future and decided to move from hotel ownership to hotel investment. They outlined both financial and lifestyle goals for the next few years.

We worked with them to structure their business in a way that would be most beneficial to potential buyers. Our team also helped them find, evaluate and negotiate with buyers and we eventually closed a sale to a large hotel management company. It helped achieve certain goals and have the time to plan the sale. Now that the transaction is successful, owners can live the lifestyle they want and do the hotel investment work they want to do.

Do not be satisfied

The past year has taught us that life is precious – and we don’t know how much we get from it. If your position no longer offers the lifestyle you want, it may be time to make a change. Whether you need to change your business or sell it, it’s worth exploring your options and getting unbiased advice. Then you can do the rest of your life as best you can.

Written by Frank Williamson.

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