Business Owners: What Are You Running Towards?
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By Tom Zucker, EdgePoint Capital
A seasoned business investor once told me that business owners are either running away or towards something. He clearly stated that he avoids owners running from something and endears himself towards those with a strong purpose towards their next chapter.
Business owners have a defined purpose, relationships that are clear, and a place to go to be significant. The simplicity of their working relationships is peaceful and comforting. As an owner ages and contemplates business ownership transition this delicate balance becomes disrupted. The ability to identify the business owner’s next chapter is often elusive.
As advisors to closely held businesses, we have seen a variety of “Next Chapters.” While there is no absolute right answer, we have found certain choices to be better than others. These answers can be grouped into three distinct categories:
Still Enjoy The Game
A business owner often approaches us to sell their business to monetize their life’s work. They desire to reduce their commitment to working and the daily pressures. After several months of playing golf, traveling, and reading books, the owner emerges with the realization that they still enjoy the game of business. They have developed significant skills and have a great sense for the game. This group of business owners are often found considering the following activities:
Invest in Diverse Ventures: Explore various industries or startups for investment opportunities. This could range from tech startups, business buyouts, or even real estate investments, depending on personal interests and financial goals. We often find investing small amounts of money behind an entrepreneur enables the owner to share expertise in a leveraged manner.
Mentorship and Consulting: Share expertise and experience by offering mentorship or consulting services to budding entrepreneurs or existing businesses seeking guidance. Board of directors or board of advisors are wonderful ways to provide insights. Many owners may not realize how much business experience they have amassed over the years.
Angel Investing: Become an angel investor, providing capital and mentorship to early-stage startups, potentially fostering innovation and economic growth. The ability to research and learn about new technologies or business ideas is exhilarating. Reliving the excitement of your journey without the pressure and capital constraints is extremely rewarding.
Life Beyond Business
The entrepreneurial journey is all consuming and absorbs some of the best years of a business owner’s life. The trade-offs a business owner makes are often unreasonable. I once had a CEO of a successful business state his biggest regret was that he missed his children growing up. This is a steep price to pay for business success.
The sale of their business represents a chance to focus on family, friends, and other pursuits. This is a great time for the seller to reflect on what truly matters outside of the business world. This could be pursuing a new career, traveling the world, or dedicating time to hobbies and interests. Identify the passions and set goals accordingly. Crafting a fulfilling post-sale life involves more than just financial considerations—it’s about finding purpose and fulfillment beyond business success. The following are a few activities that business owners who value life beyond business consider:
Travel and Exploration: Take time off to travel and explore different cultures, gaining new perspectives and inspiration for future endeavors.
Family Time and Relationships: Dedicate time to strengthen familial bonds and relationships with loved ones, nurturing connections that may have been impacted by the demands of entrepreneurship. Sometimes just being an outstanding grandparent and part-time babysitter is the right answer.
Focus on Health and Wellness: Prioritize health and wellness by engaging in activities such as fitness routines, meditation, or holistic retreats to maintain balance and vitality.
Desire to Be Significant
We all value to be significant. However, some people need to feel important and contribute to their communities. The power that comes from being in-charge of an organization, club, or community association is what some owners choose to focus on post-sale. Their leadership and organizational skills are highly valued by civic organizations. The following are a few activities that owners with a continued need for significance consider:
Start a Foundation or Charity: Utilize newfound wealth to give back to the community by establishing a foundation or charity focused on causes close to the heart. One of our past clients generously donated his sale proceeds to help build 20+ churches across the world.
Personal Development: Invest in personal development, whether through further education, learning new skills, or pursuing hobbies and passions that were previously put on hold. A doctorate degree in a new and interesting area could be the motivation needed for the next chapter.
Philanthropic Initiatives: Support philanthropic initiatives by funding projects aimed at important social causes, civic missions, and cultural preservation. The list of people asking for money will reach an apex post-sale, but the challenge is to balance time with capital.
Selling a business is a monumental milestone, often the culmination of years of hard work, dedication, and strategic decision-making. The challenge is to approach the next chapter with as much vigor as you did to create your masterpiece business. The options are endless, but the most important element is to ensure that you feel engaged and are running towards something of importance to you.
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