If you have entertained the idea of selling your business, you have probably asked the question, “When should I sell my business?” Even though external economic factors play a role, there is no universal answer to this question. The answer is actually unique to each business owner. When deciding the right time to sell your company, it is important to consider financial, practical and emotional factors. Here are the primary key indicators that it is time to sell.
1. The Business is at its Financial Peak
The most important factor when selling your business is its current financial state. Ideally, you want to sell when business is doing well. For many business owners, this is a difficult decision to make. If their company is thriving, they want to hang on to it, or wait until business is even better and the value goes up. You must be careful with this line of thinking. Timing the market can be difficult, if not impossible. When you hold out for more money, you risk falling victim to unforeseen circumstances. In decades of experience working with business owners, we have seen it happen a lot. We perform a business valuation, and give the seller a very desirable sales price, but they decide to hold off because of a sudden upward trend in business. Then a year or so later they want to sell, but business is not as good as it was and subsequently neither is the sale price.
When you are considering the sale of a business you own, the best, first move you can make is to get a comprehensive business valuation from an experienced business broker. When we value a business, we recognize that every one of them is different. We consider this when we take into account various tangible and intangible characteristics about the company. Comparing this to financial and industry trends, we formulate an accurate sale price. After years of hard work and time invested in your business, you would want to get the most money possible out of the sale. The best way to do that is to sell it when it is at, or near, its financial peak.
Do You Know What Your Business is Really Worth?
2. You are Burnt Out
All of the time and effort you put into a business can feel like a burden. Burnout is one of the principal reasons why people decide to sell. Many business owners feel like they have to be always be fixers and the more personal time they invest into their company, the better it will be. The strategy usually backfires and burnout strikes when it is already too late. Investing in your mental well-being is also very important. You can do this in the form of taking a vacation, or hiring staff who can handle some of your responsibilities. Whatever it is, it must be sustainable for the business. If you have taken steps to avoid burnout, but they have not been successful, you should consider selling your business so you can relieve yourself of the stress it causes you and discover another venture that makes you feel fulfilled.
3. You Have a New Interest or Financial Goal
Is there a new passion or business venture you would like to pursue? Do you have a financial goal that the proceeds from a business sale could help you achieve? Many business owners decide to sell because they have simply lost interest and want to try something different. Doing the same thing for many years can eventually drain the excitement out of it and continuing to run a business that you are bored with can lead to burnout. We often have business owners come to us who want to sell their business so they can purchase another one, in a different industry. A fresh start could be just what you need to revitalize your entrepreneurial passion. Perhaps you would like to try purchasing a smaller company and building it up again. In addition, your existing experience as a business owner can give you a head start when beginning a new venture. You can also take the things you like and dislike about your current business, and use them to find one that is a better fit.
4. You Want to Retire
A business owner who has dedicated a good portion of their life to growing and running a business deserves to have the opportunity to retire early enough to enjoy the fruits of their labor, while they are still in good health. Nobody wants to have to sell because of health complications, or any other unforeseen circumstances for that matter. Selling a business and watching it continue to grow under new ownership can be very rewarding. Perhaps you want to take a step back, but remain involved. You can sell off part of the business, or stay on as a consultant to help transition new ownership. Such a role is often welcome by business buyers, so they don’t feel like they have to learn the business overnight, in order to continue its success. Whatever you choose to do, it’s always a good idea to have an exit strategy in advance. Plan for the future, so circumstances don’t end up dictating your actions. As a business broker, we can assist you in this process, even if you are not quite ready to sell, so your eventual sale goes as planned.
While the business environment in Southwest Florida looks strong, and right now is a great time to sell, there’s no clear indication as to how long economic growth will continue. If you are thinking about selling a business you own, perform a status check on its financial health and growth, as well as your level of interest and stress indicators. You will also need to know the true market value of the business to make an informed decision. Contact us at CIBB to obtain a free, no obligation, business valuation estimate. The results could help you decide if it is the right time to sell.
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