The psychology of exits… we have a real intellectual take on exit planning and your state of mind this week. In a colorful episode, Allie Harding gives us an academic take on the importance of identity in business, and how this can affect life after it. Understanding the psychology behind the exit is a crucial part of a successful transition.
Allie has built up two consultancy companies off the back of extensive academic study, including a PHD in Business Psychology.
You know how we always say that a successful exit from a business is as much about life after business as it is about the transaction? (the clue is in the title of the podcast!) Well Allie has the science to back this up. Listen and learn!
How does business change the identity of different people?
Allie has advised hundreds of business owners down the years. She can define them in 3 separate categories:
1.) Ready Rogers:
These are the easiest to deal with when it comes to exit because their self-awareness is at such a level they can walk away and know exactly how they will cope with life after business. They probably have many interests outside of their business, and are already in the habit of disconnecting from work in order to stimulate their mind elsewhere.
2.) Moderate Michaels:
They might need some help with their guiding principles but can still be persuaded to change their mindset to help them manage their time after they sell. Their business is basically their life, but the original creative energy they had that helped them build up their business in the first place can still be harnessed with the right guidance.
3.) Foolish Freds:
This is the bracket of entrepreneurs who simply are their business. Their entire life revolves around it; their happiness, their sadness, their friends, perhaps even their family. When it comes to exit planning they struggle immensely with the concept of change, both in the sense of readying their business for sale and also afterwards in adapting to a different lifestyle.
What is the best way to find out how much the business is part of someone’s identity?
Getting to know the owner is absolutely the best way. However, along with the multitude of personality tests out there OrangeKiwi has a 15-minute online survey specific to the topic. It should be given to them by a trusted advisor that can walk them through the results in a no threatening way.
What is it that entrepreneurs people need to replace once they retire?
Relatedness/relationships, competency and autonomy. Without daily interaction with colleagues and customers, it can be very hard to replace these things if you aren’t prepared.
The 3 main stages that a business owner must face before a successful exit:
1. The exploratory stage:
Answering existential questions about what you do and don’t want for your business, and who you are if not your business. This should be taking place long before a sale. In Allie’s words, “the bridge to the future [outside of the business] is being built while they’re running their business”.
2. The strategic phase:
3. The execution:
The detail of the deal and the negotiation. It’s all too easy to concentrate on this, but without taking care of the other two stages, you will be doomed to failure.
What’s the one takeaway for a business owner looking to sell now?
Start by finding a trusted advisor and ask them “how many businesses have you helped?”. If they can point you to two or three, then pick up the phone and speak to the owner of one of these businesses.
Bob P. Burford – Halftime: Moving from Success to Significance:
Bo Burlingham – Finish Big: How Great Entrepreneurs Exit Their Company on Top
Wise words for the road:
“The psychology of the owner is the greatest opportunity for success and the greatest obstacle of success.”
“Entrepreneurs limit their ability to achieve success because they don’t continue to develop themselves“
Allie Harding Taylor is a partner at Orange Kiwi and an accomplished organizational consultant who assists CEO/owners, boards, and organizations at critical points of significant transition in their organizational life cycle. She is currently a Ph.D. Candidate in Business Psychology with a dissertation that is focused on change and effectiveness during business owner transition. The impetus for her research stems from working with business owner clients who were picking up the pieces after failed, sudden or unplanned exit events. Allie’s research is aimed at helping CEOs position themselves (and their firms) so that they can be part of the elite 7 percent of low to mid-market business owners who finish big and exit their companies on top and live a life of satisfaction and significance beyond their role as owner.