Cashing Out – Part One

For many business owners, cashing out on the value of their businesses is an important, integral and significant part of there overall retirement or reinvention plans.

Most will only do it once in their lifetime. So why do we know so little about what is involved in the cashing out process? What the options are? How can you protect your interests in this process and ultimately how can you maximise your returns?

In this series of articles we will look at the technical process, some of the tax implications and the motivating factors behind such a big life changing decision.

Why are you cashing out?

Whenever I engage with a client who is starting their cashing out journey, I start with the simplest of questions, what are you doing this for?

Experience has shown me that this simple, unchallenging and easily comprehended question can throw up a huge range of answers, but common ones include;

  • Looking for a capital sum for personal financial security 
  • Needing to be released mentally and physically from the business 
  • A desire for a simpler life
  • Recognition that you’re not ‘at the top of your game’
  • A wish for a better work life balance
  • Wanting to see the business given new life and impetus to achieve its potential 

In reality, all these (and more) form part of the consideration to start the cashing out process and at different points in time will rank higher or lower on your scale of priorities.

What does the future look like?

For me equally as important (but oft overlooked) is my second question of, I can see what you are moving away from but what are you moving too?

This takes a little more thinking about. As business owners we can be very ‘task focused’ and so concentrate more on ‘getting the job done’ than what comes after.

It’s more difficult to answer and for many needs a degree of introspection.  For those looking to cash out to start a new project or begin a new phase of reinvention (such as becoming an artist or running a yoga retreat) it’s easy… we are back to that ‘task focused’ thing, but for the rest it’s much harder.

To help bring a little clarity, the third question is around visualisation. You’ve cashed out but now what do you see yourself doing?

As business owners our time is often filled with the demands of our business leaving little time for much else. But taking some time to think how you will fill that 50 – 70 hours a week, for the rest of your life is an important task.

The next chapter

  • Sadly, there are many who find their retirement to be unfulfilling and unrewarding. Coming away from a business can be a major loss of identity, status and focus.  So instead of trotting out the retirement go-toos of golf, gardening and spending more time with the family its worth considering some of these ‘real life’ pull ideas.
  • Travelling – not a holiday. Journey to those far flung bucket list places that take some effort but can offer fully immersive experiences. Walking in the Himalayas, see the cherry blossom in Japan or watching cricket in the Caribbean…you get the idea.
  • Scratch the itch – think of that project you always promised yourself you’d do before work got in the way. Learn to paint, write that novel, dust the motorbike leathers off again.
  • Do good stuff – volunteer for charity or community work. It doesn’t necessarily have to be as a trustee, there are numerous local charities and community groups crying out for drivers, befrienders or volunteers who just want to help.

So now we know why we want to cash out, what we are moving too and what we are going to do when we get there we’d better get cracking and look at the options.