There are various reasons why people are motivated to have their own businesses. According to a study conducted by Guidant Financial, 55% of aspiring small business owners believe that having their own business is a great opportunity to be their own boss. The second out of the top response is to pursue one’s passions in their own business.
Purchasing a small business is exciting! However, you will experience both positive and negative emotions that, if not kept at bay, can be overwhelming and adversely affect your newly acquired business. Below are some common feelings new business owners might experience, along with tips on these emotions.
If you are a previous small business owner or seller, read on to learn one essential thing you can do to assist the new owner during this transition.
4 Most Common Emotions
Buying a small business is a big leap. But, you’ll feel energized and confident because, despite the uncertainties and economic climate, you’re officially on your way to making your business dreams come true.
You imagined all the good things that would come after signing the purchase agreement. Excitement is a critical ingredient for business success. The transition will be tough; getting your business running requires mountains of excitement. Keeping your passion strong when the excitement wanes is equally important.
You’ve recently acquired a small business. While there is joy, there is also fear. Everyone starting something new struggles with this. We are here to tell you that it is perfectly normal to feel afraid. It can be overwhelming to deal with the demands of the business. The cost of acquisition alone, determined by the valuation, can be mind-boggling. Add to that, there can never be absolute certainty of the projected income.
Fear may be hard to get past. The good thing is that you do not have to start big. Start small, evaluate the result, and then put in some more. For instance, rather than operating for 8 hours per day, start with 4-5 hours. Then evaluate what can be improved in service, delivery or operating hours. Ultimately, the best way to deal with fear is to do it anyway!
The first roadblock? You made the wrong call, can’t seem to win the employees, or maybe it’s taking you a long time to figure out the machines. How do you respond? Your first reaction will be frustration, and again, this is perfectly normal.
These are markers of a business transition and are, in many ways, essential to stabilizing the business. Every time you make a mistake or feel lost, try another method and learn what doesn’t work. It’s a good idea to keep a log of these instances as they happen. This log can help you with future training.
After the sale, your emotions are a bit fickle at the start of a business. When faced with a problem, they can trick you into thinking, “shouldn’t I just pack up and leave now?” or “this may be a bad decision.” Listening to this inner critic will only wreak havoc on your acquired small business, not the problem itself. Keep reminding yourself of the reason you wanted to buy this company. This reminder can help you refocus and feel re-energized.
Your obligations and commitments such as people management, customer relationship building, income forecasting, and business strategizing will use large chunks of your time and energy. This can feel overwhelming and as a new business owner, you might start to doubt your ability to handle everything. This may lead to guilt and feeling like you’re not doing enough. More often than not, this will be made worse by the guilt you will feel for neglecting areas of your personal life. The truth is, this is nearly unavoidable.
Your new business is like a newborn. You have to accept that even with the most well-crafted business transition plan from the previous owner, you have to dedicate most of your time to keeping the business up and running.
To help you lessen the feeling of guilt, it may be helpful to focus on one single task at a time, and not get pulled into feeling overwhelmed by trying to focus on all of the transitions, all at the same time. The whole picture of this transition can be stressful, but dealing with it chunk by chunk and focusing your attention on one part can help you move along and a steady pace, then build momentum as things start to run smoothly.
What you should do as a new owner
All the excitement and transition, combined with fear, after buying a business can take an emotional toll. Knowing what to expect and what to do can help you face the roller coaster of emotions ahead.
Acknowledge how you feel
A wide range of emotions can be felt in a short span of time. Sometimes you may even feel that you are caught in one emotion for far too long. While this is completely normal, it can also be frustrating.
Feel the emotions as they arise, even the unpleasant ones. Oftentimes, we are taught to just ignore or hide what we feel, but this will only amplify them. Acknowledge and be clear about why you feel that way. Often, fear is the emotion causing discomfort. Ask yourself, “How can I move past this and take steps forward?” or “What can I learn from feeling this?” These emotions come and go, so when you’re in a tough spot emotionally, acknowledge it and remember, it will pass.
The upside of buying a long-standing small business is that, more often than not, there is already a core team that is knowledgeable about the ins and outs of the business. They are most likely trained and informed as well on how to support you before the hand-over.
With the euphoria of buying a business, you may feel as though you can or must do-it-all. The truth is, in order to grow and fast-track the transition, you may need to give some control to others. When you delegate, your business becomes more efficient. It will also give you time to learn the other parts of the business.
Create or review your contingency plan
Your contingency plan should cover natural disasters, credit crunches, accidents, or anything that may disrupt your flow of work. You are lucky if a contingency plan was generously shared with you after the deal. Usually, this is common for buyer-seller relationships that are close-knit. Then, all you need to do is review the plan and refresh the other key employees about it.
In cases where it is not available, you must create one. It is vital to have a contingency plan because hiccups arise when you least expect them. To start, think about the elements that are crucial: cash flow, employees, and inventory.
What you should do as the seller/previous owner
The buyer-seller relationship doesn’t end after the deal is closed. More often, it continues until the new owner gets the hang of running the business on their own. It is your job as a seller to ensure that everything is set in place before you fully step down. After all, you are not just leaving the business behind, you are leaving your employees, loyal customers, and a legacy. It is best to provide assistance when needed while allowing space for the new owner to thrive on their own.
For you to provide the support that the new owner needs, the key is to craft a comprehensive and easy-to-understand transition plan. A transition plan is critical in this process. Here are some essential parts that you should include:
- Customer data
- What is the average spending of the current customers?
- What are their demographics?
- What are their buying habits?
- The current marketing strategy
- What are the gaps in the current marketing strategy?
- What platforms have been utilized?
- What is the current market positioning?
- Key people in the business
- Who is part of the core team?
- What are their responsibilities?
- What are their contact details?
- Knowledge Transfer
- What skills will you teach?
- How will you transfer those skills and knowledge?
- What will be the timeline? (1 week, 1 month, 3 months)
- Potential pain points
- Will there be operational changes?
- Will there be a need to re-train employees?
- Will there be a change in policies?
- Clarification of your role before and after the transition
- Will you maintain an ongoing consulting role?
- Should there be a non-compete agreement after the sale?
- What is your level of participation 100 days post the sale?
For both parties, this period in business is overwhelming. Managing your emotions is essential to the success of the business, regardless of whether you are the buyer or the seller. Former owners are expected to go the extra mile to ensure a smooth transition, so a well-crafted transition plan is necessary. If the transition plan is communicated well with the new owner and executed properly, you’ll be off enjoying your freedom or starting something new as soon as possible. For the new owner, staying emotionally balanced helps your new team of employees and your new customers feel confidence in you and your leadership.