The role of soft skills, trust and EQ (emotional intelligence) continue to gain traction as critical considerations in business. At a managerial level, there is now a widespread recognition that emotions matters, but do emotions also structure sales and if so, under what circumstances?
Although corporate sellers generally remain emotionally detached since they are primarily concerned with price and execution, for entrepreneurs, selling is a different story. These sellers have to face the reality of letting go of a business they nurtured from the ground up. They may even feel emotionally attached to a specific brand they helped to build and fear for its future. While some sellers and advisors ignore the emotional side of sales, there is ample reason to address emotions before they hijack the process. Indeed, directly addressing the emotions of a seller can lead to faster, more efficient and friendly sale. Ignoring emotions can have the opposite effect.
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So how does one manage emotions during a sale? First, it is important for everyone to recognize his or her role. In short, a business advisor is not a therapist, even if they are there to guide a seller through a potentially difficult time and offer strategic advice. In addition, it is critical for sellers to emotionally prepare prior to selling and throughout the process. Among other things, sellers are well advised to take the following steps:
- Understand Why You Are Selling: It’s important to know why you are selling your business and why you are selling now. If you have any doubts, you may want to hold back. You need to be fully invested in the decision and ideally, so do your employees.
- Find an Experienced Advisor and Trust his or her Judgment: You may know your business better than anyone else, but this doesn’t mean you don’t need an advisor. Find an advisor with experience in your industry and experience working on mergers and acquisitions on both the sell and buy side. Your perception of your company’s value may be higher or even lower than the valuation made by your advisor, but you need to trust them to come up with a fair valuation. After all, you are hiring an advisor because they have a perspective that you likely lack—a perspective that can take into account factors you may not be able to see from your vantage point as an owner.
- Settle on a Realistic Price and Stick with It: Naturally, you want to make as much money as possible on the sale but be realistic. Work with your advisor to come up with a price and trust his or her judgment about what is realistic. Don’t be delusional.
- Educate Yourself on the Process: Part of the reason sales are emotional is because they raise fears, but fears are usually rooted in what you don’t know rather than what you do know. Educate yourself on the process—both the sell and buy side of the process. Indeed, thinking from the buyer’s perspective is critical. If you’re working with an experienced advisor, they will make education a top priority.
- Make Decisions in a Timely Manner: Sellers who fail to manage their emotions all too often waffle on decisions and this can lead to a lost deal. As a seller, you’re the dealmaker. Doubt, self-doubt, and excessive emotional attachment to the entity you are letting go can all get in the way of sound and fast decision making.
Selling something you built up from scratch is obviously a lot more complicated than selling a car, house or cottage. When you sell a business, especially as a founder, you’re selling a concept, a dream and in best-case scenarios, a community of employees that includes those with whom you have longstanding relationships. For entrepreneurs who are truly invested in their businesses and employees, selling may feel a bit like selling their own family. There is no question, then, that emotions are going to be involved in the sale. As outlined above, however, by taking steps to manage emotions—with the guidance of an experienced advisor—emotions don’t need to be a deficit. In fact, with the right support, a seller’s emotions can even be leveraged to support successful deals.