It’s a tricky subject and there’s no simple answer that will apply to every business because, as a prospective seller, you’ll have to weigh your personal goals alongside the business’s outlook and current market conditions. Objectively, the best time to sell is when the business is in a position to deliver the highest return on your investment – but that may not align with your own goals, which could change as a result of unforeseen events.
We’ve picked ten indicators that may be a strong sign that it’s the right time to move your business on.
You’ve gone as far as you can
If you’ve grown your business from small beginnings but now feel a sense of overwhelm at the hard work involved in taking it to the next level, it could be time to consider selling up and moving on. While small can be beautiful, most successful businesses are constantly seeking new opportunities to grow and develop. If you absolutely can’t see yourself being part of that evolution, you might want to consider passing it on to those who have the skills and experience to achieve its potential.
Market conditions are favourable
Savvy business owners always keep an eye on their business niche. In-depth market knowledge is invaluable; if you stay up to date on the general outlook for your sector, you’ll be able to pinpoint the best times to sell. Popular trends could give your business a boost – the increasing demand for more eco-friendly products could have a big impact on businesses that specialise in recyclable packaging, for instance.
The market is moving away from you
On the other hand, you may feel that your market is about to level off, delivering diminishing returns. This situation often arises in tech-based businesses where new developments can wipe out established operations in short order – consider how streaming services have decimated DVD sales, for instance. If you feel your business is slipping, be prepared to sell sooner rather than later.
You’ve identified a fresh opportunity
A compelling reason for selling your existing business is because you need some capital to start a new venture. Obviously, you could consider raising finance for your new business but if you feel you need to dedicate time as well as money to getting it off the ground, it may be more logical to cut your ties, sell your current business and move on.
Your goals change
This is a common catalyst for change. You may decide you want to travel, relocate to a different part of the country – or world – or to spend more time with your family. It may simply be that you’ve lost your passion for your business and feel as if it’s time to start afresh. If you’re experiencing doubts about continuing on your current trajectory, it’s worth exploring your options.
You feel conflicted
Even if you don’t plan for it, change often happens regardless. Business owners can find it hard to draw a clear distinction between their personal and professional lives but if something occurs to change the dynamic – having a baby, experiencing health problems or losing a partner – it’s important to prioritise.
You don’t have the capital to progress
In some ways, this is related to the first point. In this case, you’ve come as far as you can because, in order to progress, the business needs more capital than you can access. Small businesses are often inherently risky and can fold before they’ve really got off the ground. If you’re in a position where you see genuine potential but need more liquidity, you may want to consider finding a buyer who can take it to the next stage.
You want to retire
Selling a business is a common exit strategy for retirement, especially where pension savings fall short of what’s necessary for a comfortable life. But selling can also be the next logical step for business owners who’ve already achieved financial security and want to enjoy a more laid-back life – perhaps in semi-retirement. The strategy here may be to acquire a less demanding business or something that returns a passive income.
Selling has always been part of your grand plan
Increasingly, entrepreneurs are acquiring – or starting – businesses with the intention of nurturing it to the point where it’s profitable enough to sell on for big bucks. If that’s been a core part of your strategy, then it’s absolutely right to market your business for sale as soon as you’ve reached your desired threshold.
You get an offer you can’t refuse
OK, so everyone knows not to look a gift horse in the mouth, right? Even if you haven’t seriously been thinking about selling, you should always consider a serious offer from a motivated buyer as it’s as rare as hen’s teeth. Maybe your business is ripe for acquisition by a buyer looking to extend his or her own empire into a prime location or by annexing a strong brand and a mature customer base. Whatever the reason, don’t pass it up without chewing it over!
Posted on January 17, 2019 | sell a business, selling, advice