Are you emotionally prepared for your business exit strategy?

A lot of business owners assure me they’re ready for an exit. They’re confident, intelligent folks. They keep a sharp eye on the financial side of their exit strategy but are still caught off guard by the emotional and psychological aspects of a major change in their financial life.

Think of it this way: wedding planning is very important. But is it more important than the marriage after the big day?

Going through a business exit forces you to deal with feelings of attachment or aimlessness that can impact your finances as much as a valuation or the specifics of a deal’s structure. Over the years, I have consistently seen two major emotional stumbling blocks for entrepreneurs navigating an exit from a business they built. Neither of them can be ignored without a cost.

“I can’t take my eye off the ball.”

For some people, the exit itself can become all-consuming. There are a lot of spinning plates to manage in an exit strategy, and it’s not hard for workaholics to pour themselves into optimizing their businesses for a greater valuation, lining up the details of internal succession, searching for deal partners, or a thousand other things.

Ironically, business owners caught in this trap become very poor at planning for the future - specifically, theirs. When I see people caught in this hyperfocus, I see people who aren’t thinking about tax planning. They don’t engage in charitable giving. They neglect their financial planning for their post-exit lives. By focusing so hard on the exit itself, they put themselves at risk of undercutting the entire reason for an exit: creating fuel for the next chapter of their personal journey.

It’s hard to snap out of a go-it-alone mindset in a complex business exit strategy. You have to open yourself to help from the people you’ve chosen to support you during the exit. If they’re worried that you’re missing the forest for the trees, listen to what they’re telling you.

“Who am I without what I built?”

Every retiree has to decide how to spend their life when they’re done with full-time work. Business owners fortunate enough to navigate their own exits face the same questions about themselves and hope that the lessons they learn aren’t too expensive.

On a basic financial level, you have to be able to pay for your post-exit lifestyle. I have seen entrepreneurs who stick the landing on their exit strategy and then spend so much money in their soul-searching or lavish lifestyles that they run out of money in a few short years. It takes more than budgeting monthly expenses. The post-exit life demands planning for long-term tax exposure, portfolio management, and preparing for future costs.

But there are also people who have invested so much of themselves in their work that they have trouble letting go. The vision of your business may fill your days with purpose, or you may carry the weight of looking after the lives of your colleagues at work. Leaving it all behind can feel like a betrayal. However, delaying an exit because of this kind of attachment can also impact the success of the exit, as so much of it is dependent on timing.

The challenge is often to find ways to give your life the same purpose you received from your work and to trust that you can do right by your coworkers even if you have stepped back from daily involvement in their lives. There’s a reason why so many entrepreneurs make philanthropy a part of their exit strategy. Aside from the tax benefits, it serves you well to give your time and resources to a cause.

For that matter, a good exit strategy should account for the time you need to devote to your personal relationships, too. It’s not uncommon to see people in their 40s and 50s conduct a business exit and then get divorced. They poured so much of their lives into 60+ hour work weeks that they became estranged from their partners… or never really got to know them in the first place.

A good personal financial planner will help you understand your emotional relationship with money and how it can impact your financial goals if left unacknowledged. The stakes, scale, and complexity of exit planning may be different, but we need to acknowledge that our psychological needs are still present. Addressing and expressing them before it is too late can make a world of difference in the success of your exit strategy.