Starting Over in Business? What You Need to Know

Building a business from the ground up just to sell it and start another one can seem like a bit of a strange path from the outside. Most people look at the stress of the first few years and decide they never want to experience that again once their business is doing well, but actually moving onto the next thing really can be the right choice for some. The first time round probably involved a lot of guesswork and learning as you went along, but you’re not going in blind this time. You can apply all of the positive (and negative!) lessons to things moving forward and know how to get it right. You might also have found that over time your business had to adapt and change to success but it’s now not something you’re passionate about, or maybe you have new interests and have just moved on. On the other hand,  having experience can sometimes also bring a new set of challenges because you have actual expectations now. You might be carrying bad habits from your previous success without even realizing it and nothing is guaranteed to work even when you’ve already done it once.

Start prepping

First things first you’ll want to get a valuation for your business and make sure that you’re happy to sell at this price. Then from there, start preparing your data room six months before you even talk to a broker. Make sure your profit and loss statements are perfect and that every single contractor agreement is signed and filed properly. If you have any personal expenses that are mixed in with company money you’ll need to clean that up immediately because auditors will find it and use it to shave thousands off your final price. When it comes to any big purchase, the buyer is always looking for reasons to break the deal or get more money off. They’ll more than likely demand every tax return and every employment contract you’ve ever completed just because they’re terrified of inheriting any hidden mess

Pay everything off

Once the sale is completely finished and the money is sitting in your account, it can be so tempting to roll straight into the new idea and take some of the old business loans with you. Plenty of owners think they can leave low interest debt running while they invest their new capital elsewhere. Starting fresh with total financial freedom is always going to be a better foundation because you have complete control over your cash flow. Are you really going to risk your peace of mind to hold onto some old leverage?! It’s so much better to walk away with a clean slate.

Work out your past failures

You might have been planning this new business for a whole before shutting down the old one, but before you buy a new domain name or start looking at office space you need to sit down and be completely honest if anything went wrong the first time. Maybe you kept bad clients around for way too long or hired people who werent a good fit just because you needed labour in the room to get the work done but you have to figure out why you made those calls. If you dont take the time to look at your own bad habits you are just going to repeat them with a brand new set of employees and blame everyone else when things break. Maybe you had a hard time letting go of control and ended up doing everything yourself until you burned out completely? You cant exactly build better systems for the next company until you acknowledge where it was that the old ones fell apart. Making the exact same errors twice is just a massive waste of time.

Better systems from the start

The good news is that you don’t have the excuse of being a beginner anymore so you can actually set things up properly right from the start. You know how important it is to have clean accounting and clear processes so get those sorted out before the workload increases. Set clear boundaries for your working hours and delegate the administrative work that you hate doing so you can focus on the big picture stuff that actually generates revenue. Buying your time back early is the best investment you can make for a second venture, you’ll know yourself that you essentially  need to build a ‘machine’ that works for you instead of building yourself another high stress job.

Build your team

By your second time around, you’ll probably know exactly how much damage a bad hire can do so you can be a lot more picky about who you bring along for the second ride. People often partner up with friends the first time just because they want company and someone to bounce ideas off but this time you need actual competence. You need people who are going to do the work and tell you the truth when your plans don’t make sense. If a strategy doesn’t work you need a team that will point that out immediately. If you’re taking staff from your old company then make sure you’re only taking the absolute best performers. When you sell a company, the employees usually stay with the business because they are employed by the entity, not by you personally. If you are starting a brand new venture and choose not to hire your old team, that’s generally fine provided you arent violating any specific non-solicitation clauses in your exit contract. You arent legally obligated to employ people forever just because you started a company years ago.

Photo by Yan Krukau