What next? Four options for entrepreneurs who have sold their business

For entrepreneurs who have dedicated years to cultivating a successful enterprise, divesting their business often represents the pinnacle of their professional journey. Despite their commitment to their work and their aptitude for embracing a challenge, they anticipate an eventual transition to a more relaxed lifestyle.

Typically, business owners have ample time to strategise for their post-sale life as the selling process is often protracted and may require their continued involvement during an ‘earn-out’ period. Usually, they will have carried out prudent financial planning and planned an agenda filled with engaging activities for the initial year post-sale, ranging from international travel to home renovations and cultivating new hobbies.

However, many entrepreneurs encounter an unexpected shift in perspective once the initial excitement of a leisurely life diminishes. With peers still engaged in full-time employment and family members immersed in their routines and interests, the sudden absence of the business’s dynamic challenges and the gratification derived from professional accomplishments can become palpable.

This transition often mirrors the experiences of those newly retired. According to a review of academic research, approximately 29% of retirees experience depression, frequently attributed to a perceived lack of purpose. Anecdotal evidence suggests this transition can also affect personal relationships, sometimes culminating in marital discord and even divorce.

Many entrepreneurs eventually grapple with a sense of regret, reflecting nostalgically on their previous life. A study by the Exit Planning Institute in the United States revealed that 75% of business owners experience profound regret within a year of selling their business.

K Srikrishna, the author of ‘The Art of a Happy Exit’, spent three years interviewing entrepreneurs and found that the lack of a sense of direction post-sale was the primary factor in ‘seller’s remorse’. Srikrishna advises these individuals to identify what genuinely invigorates them and to define their life’s purpose beyond business pursuits. “There’s only so much golfing or boating one can do,”  he says.

For many entrepreneurs, rediscovering a sense of direction is crucial. This often entails re-engaging with the business world, albeit in different roles.

Iain Marlow, Head of Investment at Traditum, believes that the entrepreneurial spirit is indelible. “Once an entrepreneur, always an entrepreneur,” he says. “These individuals may have spent 20 or 30 years building a business and should be proud of their achievements. Often they are tempted to challenge themselves to see if they could ‘do it all again’ but what they really need is a way to channel their expertise.”

Factors such as age, health and family circumstances will all have a bearing on what new roles entrepreneurs can take on and the level of involvement that would suit them. George Lyall, Client Services Director at Traditum, who has extensive experience with high-net-worth individuals and former entrepreneurs, says: “Many people who have sold their business still feel they have a lot to give but the most appropriate solution will depend on the individual.”

For those seeking a renewed sense of purpose or engagement, several avenues are available:

1. Active Investing

Becoming an angel investor is an attractive prospect for many ex-entrepreneurs, especially in sectors they know where the business can benefit from their experience. However, Marlow cautions against hasty investments, highlighting the distinct skill sets required.

“People often assume that having run a successful business, they are well placed to invest in other firms in the same sector – but running a business and investing are very different skills. We have seen entrepreneurs lose money by making this mistake.

“At Traditum we help clients to find the right investment opportunities, where they can leverage their skills and experience, but in the right way and with the support of investment professionals.”

2. Philanthropic giving

Utilising sale proceeds for philanthropic purposes offers an avenue for meaningful contribution. Engaging in philanthropy extends beyond financial donations, encompassing both time and expertise. Establishing a charitable trust can serve as a conduit, enabling entrepreneurs to make a lasting legacy to society while involving family in its governance.

3. Volunteering

Involvement in charitable and community organisations enables former business leaders to apply their professional skills in different contexts and provide a fresh perspective. Opportunities are diverse, ranging from environmental conservation to supporting health services and disaster relief efforts.

4. Non-Executive Director Roles

Leveraging their rich business experience, former entrepreneurs can guide and influence other businesses within their areas of expertise. Serving as a Non-Executive Director offers substantial responsibility and the opportunity to make a meaningful impact, while also enabling the pursuit of other interests.

Navigating the transition from business ownership to a new lifestyle is a complex and daunting task. This shift represents a critical juncture in a business owner’s career, where strategic decisions must be carefully considered. However, for entrepreneurs eager to embrace new challenges and opportunities, venturing back into the business world is not the only option.

Whether it’s pursuing a new business venture, becoming an angel investor or exploring philanthropy, there are many different possible pathways. Their journey is about charting a dynamic and fulfilling new course, where they can use their unique talents to continue to make a significant impact in the business landscape or on society as a whole.