Kno w what you will do with the proceeds
“Business owners often focus so much on their businesses that they don’t think about themselves,” says Louw. “For the first time in their lives they need to think about their personal financial situations.”
This is critical because running a business and investing require completely different mindsets.
“When you own a business you are subjectively involved, you concentrate your assets and gearing is okay,” Louw says. “But investing needs a very different approach. You need objective advice because you can get emotional about your own money, you need to diversify and when producing an income, gearing should be nil or limited.”
Having a financial plan in place before you start the selling process also helps a business owner know how much they need to realise from the sale.
“We tell our clients to get good wealth planning advice f irst because it helps them to know whether their numbers are realistic or not,” says Grantham. “Sellers need to have a clear idea of how much is enough.”