The Emotional Crossroads of Selling Your Business: Lessons from Berkshire Hathaway

Imagine standing at a crossroads with your business — a venture you’ve poured your heart and soul into for years. Selling feels like stepping into the unknown. But, holding on has risks you can’t control. Many founders find themselves here: torn by an emotional choice with huge financial impacts.

The truth is, selling your business isn’t about profits. It’s about securing your future and avoiding risks. To see why timing is key in selling, we must first look at Berkshire Hathaway’s unique resilience. Smaller businesses lack that safety net.

1. The Problem: Your Business Is Your Biggest Risk

When you started your business, it was likely worth very little. Over time, though, it has become the cornerstone of your net worth. Most business owners have about 80% of their wealth in their business. It’s an illiquid asset, hard to access or diversify.

While that level of success is something to celebrate, it’s also a potential trap. The more your wealth is in a single asset — your business — the more vulnerable you are to outside risks. Unlike Berkshire Hathaway, your company is likely less resilient. It is not diversified across many industries and geographies.

Consider the risks:

• Economic downturns: The COVID-19 pandemic showed how fast businesses can go from thriving to struggling.
• Loss of a key client: A major client leaving can create a significant financial hole.
• Health issues: A disability or illness may hinder your ability to run your business.

These risks don’t just threaten your business — they threaten your personal financial future.

2. What Makes Berkshire Hathaway Different?

Berkshire Hathaway thrives because it is built on a foundation of diversification. It owns companies in many industries, from insurance to energy to consumer goods. This spread reduces its exposure to any one risk.

Additionally, Berkshire prioritises strong management teams. Warren Buffett famously invests in businesses with leaders he can trust to make the right decisions, even in volatile times. These leaders can adapt their businesses to changing conditions. This makes Berkshire’s portfolio resilient to market shifts.

Small businesses, however, don’t have this luxury. If you are both the owner and the operator, your business’s success relies heavily on your presence and decisions. This concentration of responsibility and wealth makes small businesses particularly vulnerable.

3. The Freedom Point: When It’s Time to Lock In Wealth

The concept of the Freedom Point is a critical one for business owners. It is the moment when selling your business would make you wealthy enough to live comfortably for the rest of your life.

If you’ve reached your Freedom Point, continuing to hold onto your business means you are taking on unnecessary risk. Every day you retain ownership beyond this point, you’re gambling with your financial freedom. As the Freedom Point guide outlines, the biggest risks for business owners who pass this point are:

• Divorce: Personal issues can complicate ownership.
• Departure: Key partners or employees leaving can impact operations.
• Disability: Health issues can force you to step back.
• Death: Your beneficiaries may not know how to manage the business, leading to a loss of value.

4. Selling as a Strategic Move, Not a Failure

Many business owners hesitate to sell because it feels like giving up. But selling doesn’t mean the end of your entrepreneurial journey — it can be the beginning of a new chapter, a new adventure!

Selling locks in the wealth you’ve built and protects you from the risks of running a business in uncertain times. It also gives you options:

• Diversify your investments: Turn your concentrated business wealth into a diversified portfolio that reduces risk.
• Pursue new ventures: Free up your time and capital to explore new opportunities.
• Enjoy financial freedom: Focus on the things that matter most to you without the day-to-day pressures of running a business.

5. The Emotional Toll of Holding On

It’s easy to become emotionally attached to a business you’ve built from the ground up. But that attachment can cloud your judgment when it comes to making the best financial decisions.

Consider this: Every day you hold onto your business beyond the Freedom Point, you are taking on risks that could jeopardise your financial future. The emotional toll of managing those risks can weigh heavily on you and your family.

Ask yourself:

• Have I already achieved my financial freedom?
• Am I holding on out of fear or attachment?
• What risks am I exposing myself to by not selling?

6. Conclusion: Recognising When to Let Go

Berkshire Hathaway’s resilience comes from its diversification and strong management. Small business owners don’t have those same safety nets, which makes holding onto a business beyond the Freedom Point a risky proposition.

For business founders, the key is knowing when to sell. That’s when it will secure your financial future. Locking in your wealth reduces your risk. It also opens new possibilities. You’ve accomplished something that few people ever do — building a successful business from the ground up. Selling isn’t a failure — it’s a strategic move that ensures your hard work pays off in the long run. Recognising the right time to let go can be the difference between financial freedom and unnecessary risk. As Berkshire Hathaway’s journey shows, the ultimate power move is knowing when to pivot and secure your future.