Too many entrepreneurs hold off on selling their business simply because the price isn’t right.
Maybe it seems smarter to keep growing the company, hoping for a bigger payday ahead.
Or the bottom line doesn’t look quite as good once you’ve paid a broker, lawyer and accountant, not to mention taxes.
But while the math of selling a business sometimes doesn’t add up, that’s not always the whole picture.
There’s something else big to consider: opportunity cost.
The opportunity cost of your time, effort, brainspace and identity being tied to a business that might not serve you. The opportunity cost of waiting to go all in on your next venture. The opportunity cost of growing into the next best version of yourself.
How should you factor these opportunity costs into your decision-making around selling your business? That’s what we’ll cover below.
The opportunity costs of not selling your business
Even if you’ve systemized your business and have great people running the show, owning it might come with burdens that hold you back from starting the company that could redefine your life.
These factors are the often-overlooked opportunity costs of keeping your business.
1. Your new knowledge and talents
Is the business you have now the one you’d start from scratch, right now?
I predict your answer is no. I started my social media agency at 22 and sold it at 32, and wrote about the story in Ten Year Career. During that decade I learned about software, automation, and different types of businesses in different types of industries. If I had to do it all over again, there’s no way I would start that same agency.
Your current self has grown far beyond the version of you that started your business. Applying your current level of skills and knowledge to the business you happened to start years ago might be selling yourself short.
If you knew then what you know now, you’d act differently. What does that mean for you today?
2. Your attention
Imagine you didn’t exit, choosing to automate and delegate yourself out of your business instead. Even if it was expertly run by other people, that business is still in your head. You’re still checking in every now and again; you’re still fielding the odd question. Your net worth might be tied up in an entity that is now in someone else’s hands, so it’s natural you want to keep an eye on what’s going on.
But here’s the thing. Your eyes and ears being distracted by that company, having it sit in your head — it’s all costing you brainspace. That attention has to come from somewhere else, like the present moment, your reasoned choice, or thinking about your next move.
This can be sufficient distraction to prevent you from moving on and starting the business of your dreams. The ties you have can cost your attention even when you don’t think they are.
3. Freedom from future crises
My agency was documented and systemized to its eyeballs. Everything had a plan and everything had its place. Then March 2020 hit and brought a different reality. Turns out you can’t write an SOP for a global pandemic.
Things happened that we couldn’t have predicted. I was pulled right back into the business I’d worked so hard to run without me, and boy was I back. I went from travelling the world and working just three mornings a week on my agency to running webinars every day, speaking with all our clients and reassuring the team that their jobs were safe.
The experience of losing 25% of our client base then growing back stronger and having our best financial year on record is what tied the bow on my decision to sell. Mike Tyson said, “Everyone has a plan until they’re punched in the face.” I wasn’t sure I wanted to be punched in the face again, at least not with this business.
If you’re available to be deployed, you will be deployed. It’s up to you whether you’re happy to have that possibility in your future.
4. Your ambition
Does your current business hold all the potential you need to craft your dream life? If you want to be a billionaire, there are specific types of business you need to own to make that happen. If you want to scale but don’t want to manage a huge team, you need a business that can generate high revenue per head.
If these things aren’t possible with what you have, it’s getting in the way of starting something that ticks these boxes.
If your heart is telling you to sell right now but your head is saying stay, scale and sell for more, which do you follow? Does your ambition involve growing your business, or a new one completely? Perhaps your current business creates a great living. It’s comfortable. It’s what you know. But that comfort comes at a cost; the motivation to evolve and push the limits of what you’re capable of. The opportunity cost of your potential.
5. Your identity
Because you started the business, your identity is likely tied to it in some way. Selling it, and announcing the sale, marks an uncoupling. People no longer see you as that finance guy or that property lady. Your slate is wiped clean, ready for starting again. The people who follow your journey want to know what you’ll do next, so you have a primed audience curious about your next move.
Without selling, your identity is tied and anything else you start is seen as less important. You tell people about your new venture and they ask what’s happening to your original business. It forms part of your conversations and it’s harder to get away.
A fresh start for your identity on top of an impressive business success could be the springboard that makes your next chapter like nothing that’s gone before.
Here’s the bottom line: In the sale of your dreams, money isn’t everything. Before you turn down acquisition offers or resolve to retain ownership, consider opportunity cost.
Consider what you might be missing. Consider all the other ways your life could evolve after parting ways with your business. You might find more reasons to sell than all those zeros in your bank account.