As a business owner, you've turned dreams into reality, navigating challenges, and witnessing your venture grow from infancy to maturity. Yet there comes a time in every entrepreneur's life when the idea of selling your business becomes a reality. If that’s you, two important questions you should ask yourself are: 

1. "What's my level of confidence in meeting my goal for selling the business?" 

2. "Am I mentally ready to exit my business?" 

These delve into the heart of a significant transition—one that requires both strategic planning and emotional preparedness.

In this solocast, Jim Barnish brings you part 2 in his series about evaluating your readiness to sell your business and move onto the next entrepreneurial chapter in your life. 

Two key topics Jim gets into: 

• Know Your Goal: Just like your initial plunge into entrepreneurship, embarking on the sale of your business requires a mix of optimism and preparation. It can be a tough process, especially mentally - it is recommended to have confidants that understand the process by your side to help bolster your confidence and build your exit strategy for success!
• Say Goodbye to the Familiar: Mentally preparing to exit your business is akin to preparing for a new chapter in life. Your business has likely become more than just a means of income; it's a part of your identity. Losing this part of you challenges you in new ways. It is best to have a plan for your life post-exit.  

About The Dirt Podcast 

The Dirt is about getting real with businesses about the true state of their companies and going clear down to the dirt in solving their core needs as a business. Dive deep with your host Jim Barnish as we uncover The Dirt with some of the world's leading brands.

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Welcome back everyone. We are in part two of our deep dive understanding of whether now is the right time for you as a business owner to sell. In our first episode, we did a deep dive on the first indicator that we talked about, which is do you have a strong motivator and we got into those motivators, personal, strategic and financial and a few examples on what that looks like. Some from my own experiences and one that's pretty Famously known example. We've got some great feedback on it and that's excellent. And so today we are here to talk about our second two indicators that help determine if you should sell. So reminder, number one mode was, do you have a, reminder, number one was, do you have a strong motivator? And the two we're gonna talk about today are number two, your level of confidence in meeting your goal for an exit. And number three, are you mentally ready to sell? After all, the decision to sell your business is a deeply emotional one with a lot of owner identity tied into the business, which is a whole other topic itself. All right. So without further ado, let's go ahead and dive into our second indicator that you are confident you will meet your goal. If you believe as an owner that you can properly market the business, set a realistic price and connect the sale under favorable conditions, then you can be confident. super confident that reasonable goals can be met through the sale. But please, please do not do this on your own. This is best done in partnership with a strategic business advisor and an additional experience intermediary to run a process, run a true process. Um, marketing the sale, running a process is a critical component of success, which must include a well orchestrated plan for things must happen. Number one, you must identify the right prospects. Number two, you must communicate with credibility. Number three, you must mitigate all risks. And number four, you must make it easy for a buyer to say yes. If these four components are well orchestrated, then your first step to an achievable goal has been reached. Realistic pricing is the next component. The higher your asking price is over what the market will bear, the lower chance for a successful sale. However, if price too low, you might sell too quickly and leave a lot of money on the table. We talked a little bit about that in our last one. Work with an advisor to determine the company's actual value, both financial value and strategic value, and any factors that might result in that strategic premium to the right buyer. I will talk a lot more about financial and strategic value and premiums on a future episode or set of episodes, as I get asked about that all the time as well. There are many internal and external factors that can determine favorable conditions for higher values and premiums, or even discounts in some cases. But a few notable ones are, internal, financial performance of the company, profits, sales, quality of management team and culture, ownership of tech and IP. So things like that can result in either premiums or discounts. Externally, it's economic performance, both local and national, market demand of your offering, performance of the market and competitors. So you're looking at these things from both an internal and external perspective. The more factors that have positive sentiment, the higher the rate of success and the better the premium. Higher value that's attributed to the business. Enterprise value, baby. All right. Indicator number three. you are psychologically prepared to sell. When you as an owner are motivated and prepared to move a sale forward, you must also face that it's going to likely be hard severing ties to the business as well. There is a unique bond that exists between founders and their businesses that is not unlike the bond between a parent and a child. It's quite strong. And severing that bond no matter how prepared you are, in theory, you can have quite a different effect in reality. Letting go of a business is often a rational decision that we make that has a rational and or emotional consequences. As an owner, your sense of security may be wrapped in your business, your lifestyle, your relationships, your life. And it's important to come to terms with the impact before starting any sale process. The last thing you want to do is be in the middle of a process and have all these personal feelings hit you like a ton of bricks that you're not getting your mind right in advance. It's emotional and that's okay. So come to terms with it, just do it. One example of how not to do things is a former client of mine. We'll just call him Jay for the purposes of anonymity. Well, Jay owned a tech business and Jay spent decades growing his business, adapting to the shift from selling hardware based products to creating tech enabled businesses. And over time they transformed into a SaaS or software as a service model. After all this effort, pivots and maturation, Jay was approached by a buyer that offered him an incredible deal, both financially and strategically, everything he could have wanted and more. And given that this was such an opportunistic event, Jay didn't even think about it. He never took the time to figure out if he was ready psychologically to sell. He just thought about the financial and strategic and all those sort of things and his family and his team. and his investors, and so he went down the price with the buyer and eventually pulled the deal on signing day after months of deliberation and evaluation. He spent months deciding the right thing for the business and his family and so on and so on, but never determined if he was actually right in the head to be able to sell himself. Jay has since exited after getting ready psychologically, of course, and now preaches to other business to make a considered decision, which allows for a much smoother transition and less selling day jitters, not just for the business, for yourself psychologically. And so, you know, that's a really good lesson learned for those of you out there, like there's excitement in strategic value and financial value and taking care of your family and your team and your business, but don't forget about yourself. Like be a little selfish, make sure you are psychologically ready to transfer your business over to somebody else. Okay, so once again, the three key indicators you need to think through as it relates to timing on the sale of your business. What we talked about last time, which is number one, you have to have a strong motivator. Financial, strategic, personal combination of the three, whatever it is, you have to have a strong motivator. Number two, you must be confident that you will meet your goal. Think about the internal and external factors that we talked about today. And number three, perhaps most importantly, You are psychologically prepared to sell. Do the work on you. Make sure you are ready. Okay. If you are considering a sale or simply want to be prepared when it feels right, the time to take a step back and take a good look at your options is now or yesterday, maybe are you motivated to sell? Do you have a strong reason to sell? Are you prepared emotionally? If you answered yes to most or all of these, then now could very well. be your time to think about selling? If the answer is no, don't be discouraged. Just don't. It only means you need to spend some more time identifying the best path forward. Whatever you choose, make sure that you play chess, not checkers, as it relates to your growth strategy. 3D chess is actually even better. Consider hiring a business growth consultant and or an M&A advisor a year or two or further prior to your planned exit to Explore options, issues and opportunities. Make the changes that you need to make now to set yourself up for long-term success. Okay. Well, if you found this episode helpful, please make sure to let us know by giving us a shout out on social media, wherever you want, LinkedIn, Twitter, Instagram, YouTube, we're everywhere, or feel free to contact me directly. A big shout out to our sponsor, Orchid Black for making this podcast possible and for helping companies. grow and exit and drive all of these things of value into the atmosphere. Till next time. Thank you for joining me on the dirt. Let's grow smart and let's exit big together. JB out.