Starting a business, and successfully running a business, can be one of the most worthwhile decisions you’ll ever make. However, there comes a moment when second guessing that decision leaves you with confusion on whether the business is growing and earning a decent bottom line, keeping your passion involved, or it simply becomes a has-been.
Knowing when to sell your business is often a much more complex decision than merely thinking, “it might be time to sell this business.” Often the most fortunate business sales have been planned for at least two to three years prior to the sale. On the other hand, it’s also important to remember that just because your business plan tells you that it’s time to sell, it still might not actually be the ideal time for either you or your business.
The question remains: how do you know when is the right time to sell your business? Here are a few pointers:
Profits are on the rise
Although it feels counterintuitive to think about selling when you see an increase in profits, this timing actually gives you a solid indicator that there are even better things coming around the corner that can ensure your business is a really attractive prospect to potential buyers and thus gives you a fantastic price and positioning power. Compare this to waiting until your business has passed its peak and you have to accept a much reduced offer, which leaves you scrambling for what to do next.
Yet there can also be ways of successfully selling your business even if profits are beginning to take a nose dive or you can sense that the market might be moving against you. For instance, taking decisive steps to shift the direction of the business away from potential areas of concern, or investigating diversification opportunities, could show buyers that there is still money to be made in your business. Finding ways to show buyers that they can add value to your business is always a big selling point, however it’s always worth remembering that your window for action in any less positive situations might be short, so moving quickly to implement effective plans is vital to your selling success.
You become no longer an asset
Regardless of how much you love your company, there often comes a time when you have to take a step back and properly assess what you are continuing to bring to the company. Being an asset in the business’s launch has its merits, however business owners who have built their company up from scratch may find that as their company grows, interpersonal skill sets are no longer required in the role of owner. You may have exceptional sales skills that have been the backbone upon which your company has grown, but these days you have a stellar sales team in force and you’re left floundering in the face of complex financial decisions and Human Resource issues. In this case, maybe it’s time to get a reward for all of your hard work and hand the reins over to someone who has the requisite skills to take the company through the next stage of its life. As tough as it is, it can be done and you’ll move onto something else just as worthy of your time.
That one lucrative opportunity shows up
Again, this is a situation in which business owners need to let go of their personal feelings and emotional investment in the company. You may have a fantastic idea or concept, so good in fact that one of the market leaders comes knocking at your door. What do you do? While the notion of letting go of your business that you’ve worked extra hard to build may feel like a bitter pill to swallow, letting it go to someone who has the resources to invest to really make it fly is actually the best action for the business in the long run.
You have lost the passion for your business
This is an all-too common situation that many business owners find themselves in. After years and years of hard work building a company up, you simply find that running it day to day has lost its appeal. While this can be a potentially dangerous situation to find yourself in, once you have lost your passion for the business, you are less likely to commit the time and effort required to circumnavigate challenges, source new opportunities, and monitor the minutiae required to keep your finances on track. The inevitable consequence is bad decision-making and the slipping of standards for all involved.
In these types of situations, it’s vital for business owners to have the necessary self-awareness to recognize these dilemmas and signs before the problems really begin to escalate, especially if you plan to sell the business before profits start to fall and the business is no longer such an attractive proposition to potential buyers.
Is your business primed for selling?
One of the most important steps is to determine if your business is actually in a truly saleable state. Do you have at least three years of robust accounts showing healthy profits and a streamlined operation? Do you have incentivized key members of staff that are willing to stay on after the sale and help to support the business through the next stages? Is the market of your industry niche on your side? As the business owner, are you still imperative to the day to day running of your business, or have you been slowly extricating yourself over the past few years so that your transition out of the company will be seamless?
These are questions to ask yourself. If any of the answers create some thought-provoking concerns, then it may be worth addressing these issues before you do anything else. Once you do believe that the time is right for you to sell, either contact a professional who understands your dilemma and can offer guidance and support.
Oftentimes, reaching out to sales experts who have years of experience in selling a business will help you fully assess your operation and its readiness for sale. If it complies with being primed for sale, a professional can fully support you throughout the entire business sales process.
The Takeaway
When it comes to selling your business, it’s all about timing, effort, decision-making, and having a backbone of support to guide you through the process. It’s a big undertaking and deserves your undivided attention. Why not go about it in the same manner that you began your business–with passion, with expertise, with planning, and with lots of attention to detail.
