I sold my first business at the age of 23 and it was the right time. I sold another business venture at the age of 40 and wish I kept it. I sold my main business to partners when I was 52. For the past 7 years we have been helping business owners build value in their businesses and help sell them in some cases. When it comes to selling your business, it is not always about age, it's about time and a few other considerations. The big question is now the right time for you to sell your business? Here are a few things you might think about as you process your decision.
1. Why am I selling? Obviously, you are thinking of selling your business or you probably wouldn’t be reading this column. Because there are a variety of reasons why one might sell a business, including but not limited to:
Financial reward
You see other opportunities where you can spend your time and energy to make more money
Family commitments
Health reasons
You have built the business to your maximum potential and believe that someone could take it to the next level.
You are bored with your current business model
You are burned out
You are ready to retire
Understanding your own motivations for selling your business are extremely important. Not only do you need to be able to verbalize this reason to others including, friends and family, staff and potential buyers but also you need to be able to critically examine those reasons and determine whether or not they are the right reasons for you at this point in your life.
2. Is Your Business Profitable Enough to be Sellable Now? The majority of businesses are not sellable and even the best business brokers report that they are lucky to sell 50% of the businesses that they list. The number one reason why businesses don’t sell is because they are not profitable enough for a new owner to buy and pay back the investment in the time they require. In determining if this is the right time to sell your business you will need to consider whether or not the financial picture presented by your financial statements is going to make enough sense for prospective buyers. You may think your business is worth any given price from ten thousand dollars to hundreds of millions of dollars, however there is a good chance that unless you have been paying considerable attention to creating a healthy bottom line over the past few years, you may not be able to get your asking price.
In determining if this is the right time to sell you will want to consider whether or not you need time to clean up the financials, to reduce your expenses and improve your profitability. If you have not had a very healthy 3 years of profits, this might not be the ideal time to sell.
3. Are You Patient Enough to Sell Your Business Now? Sure you want to sell your business now, however selling a business is not for the faint of heart or those who are impulsive and impatient. Recently we were working with a seller who thought their business was going to sell immediately to the first buyer that came along. Fifty four interested parties later and after months of hard work and due diligence, the sale finally went through. Prospective buyers will question every aspect of your business and want to know the reasons for many of your decisions and operational processes. Answering similar questions time and time again can be draining and time consuming.
Selling your business is a roller coaster ride that is much harder to navigate than selling your house. The average time to sell a business is between six months to one year. Some businesses take much longer to sell. Patience is a virtue that you will need as you attempt to sell your business and navigate the negotiations, abrupt buyers, and due diligence process where prospects pore over every detail of your business.
While there is never a right or wrong time to exit your business, understanding the business process and what buyers are looking for is critical. For a copy of our white page 7 Key Steps to Selling your Business, email dave@pivotleader.com and we will fire it off to you.
Your business may be the most valuable asset you have. Exiting the business and recovering your investment should be a concern to you as you move on to your next stage of life. Is now the right time to sell your business? It may very well be….
Dave Fuller, MBA is an Award Winning Business Coach and the author of the books Profit Yourself Healthy and Pivotal Performance. Now is the right time to email dave@pivotleader.com .