February 25, 2016
Many successful entrepreneurs reflect on what it will be like to sell their business, receive a sizeable check, and bask in the glory of a job well done. All the hours of hard work, managing payroll and cash flow, and stress-laden nights, have finally paid off.
Now what? The daily challenges and hands-on building of assets and wealth are likely over, but the prospect of 365 days of leisure may leave you feeling empty. Most of your life’s work and self-esteem has been tied to a business that is no longer a part of your life. Money is nice, family is important, but what about purpose? Purpose may take the form of being the best golfer you can be, doing community service, or finding new ways to create wealth. While appearing to put you in an enviable position, it is important to consider who you will be after you have sold your business. Otherwise, you can become lost, and yearn for the good old days of figuring out how to make payroll at week’s end.
Here are some tips on how to handle maybe the most challenging transition you will face in your lifetime.
Understand and prepare for a new lifestyle. What will keep you busy, your mind active, and body healthy? You are now entering a place where you have that precious commodity that has eluded you for years, TIME. Make this a blessing, not a curse. Just as you laid out plans to build your business, be proactive and chart out a course for your new-found freedom.
Create a financial plan that fits your needs for the foreseeable future. You may not have tracked what you spent when the cash flow was plentiful from your business. Now you are left to rely on your resources, without a paycheck or company bonus. Determine how much you will spend (with additions for things such as extra travel, new hobbies, charitable endeavors, or increased costs for health care). Coordinate your financial resources with your cash flow needs. Consider sources of income from rental properties, pension benefits, or Social Security.
Establish an investment strategy that makes sense. You are no longer in the accumulation phase of life. You may require a blend of income and growth that meets your needs for income, keeps up with inflation, and allows you to maintain, or grow your net worth. Stay within your comfort zone. Establish an investment plan you can understand and that allows you to sleep at night.
Communicate with your spouse. More than one business owner I have worked with has joked about his/her spouse being terrified that they will now have to take care of this person that for years was conveniently tucked away at his/her business for 12 hours a day. This is serious business. Your relationship with your spouse will now change. Discuss it, understand it, and make sure both of you can enjoy precious time together (that you may not have had before), while still maintaining your individuality.
Establish your legacy now. You will have time to consider what is important to you and what mark you want to leave on this earth. It may be spending more time with your grandchildren, giving back to the community, providing consultation for new and aspiring entrepreneurs. Also, update your estate planning documents and create a plan that protects the wealth you have created, while fostering financial responsibility for future generations.
So you thought your work was done. It was, and successfully. But there is much more to do. This phase of life can be the most enjoyable, encompassing much more than the monumental accomplishment of building a successful business. You have much to look forward to.
Brent Soloway, ChFC®CERTIFIED FINANCIAL PLANNERMainspring Wealth Advisors
Financial Advisors of RJFS are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. Opinions expressed in this handout are those of the author and are not necessarily those of Raymond James.