Many business owners get to the one point in their career where they are plagued with the question, ‘Should I sell my business?’‘ Many factors are in the game, and it’s normal that some owners are not entirely sure whether they should sell their company. If you are one of those business owners and the same “should I sell my business” question is going through your mind – lean back and continue to read.
We are going to help you by determining what the possible reasons can be for selling a business and what the best option is in each case. Not only that, but if you decide to sell your business, we will provide you with the most valuable advice one seller would want to hear in order to sell a business for the maximum price and move on to the next business or life project.
Why Do You Think About Selling Your Business?
When you ask yourself, “should I sell my business,” there has to be a reason or two for that. Retirement, burnout, sick relatives, strong profits, risk adversity – these are just some of the possible factors that may lead an owner to sell a business.
There can be both personal and business factors that impact this very important decision, and the timing of when to sell a business may seem like a logical option. There is always a point where an owner is done with running the business.
So, why may business owners consider selling their businesses? Here are some of the reasons:
#1 Burnout
If you are constantly working, never take time off, and haven’t been on vacation for a long time – the chances are you’ll be overwhelmed and stressed, which will lead to burnout. That is nothing unusual as entrepreneurs are prone to overwork themselves.
However, just because you are exhausted does not mean you should sell your business immediately. First, take some time off to relax and recharge. Find the actual cause of this feeling – maybe it’s not just because of too much work, maybe it’s because of too much work on something you no longer like as much as before. Try to relieve stress by using stress management techniques or whatever works for you. Additionally, delegate some business activities to your employees – you don’t have to do everything. This is vital because selling a business for maximum value means the business should not be reliant on you as the owner. If it is, you may be sacrificing the price of your business because you’re doing too much, your customers only want to talk to you, and your employees need you for every key decision.
If those attempts to relieve burnout are unsuccessful, you no longer feel your old passion for business, and you still get a feeling of exhaustion from time to time – perhaps it’s time for a change.
#2 Lost enthusiasm and energy for running a business
This one may or may not be connected to the previous potential reason. You don’t have to feel burnout to consider selling a business. You may just lose the enthusiasm and overall energy for running the company. You don’t feel joy doing it, it is not that important to you as before, and you are doing your work just because you need to. Additionally, the world is constantly changing, and you are tired of keeping up with it.
Also read: How To Sell Your Business FAST | The Ultimate 10 Steps Guide
Remember why you started and how much effort you put into building your company. Look into the future and try to anticipate all the great opportunities for you and your company. If you can recall how you felt initially, try to stay motivated to continue. But if you’re tired of running a business and having that much responsibility, you are ready to sell a business and move on.
#3 You want to start another business
Business owners carry entrepreneurship in their blood and soul, and when they smell the great opportunity, they want to take it. Changes of interests, more significant potential in another industry, more room for growth and development are only some of the reasons why they want to start another business.
If you can relate to this and want to pursue your career in another industry, then the answer to “should I sell my business” is more than evident. You shouldn’t waste more of your time and energy on the current business. When you sell your business, you will also have significant capital resources and time to pursue your next big projects.
#4 Retirement
Retirement is a common reason for selling a business. Everybody’s getting older, and there is not as much energy for running a business as before. You may consider traveling the world with your spouse or friends, spending time with your grandchildren, or just enjoying your free time after years of hard work.
However, if you are still passionate about your business and you look at it as your child, you may have a tough time selling it and leaving. Therefore, you may consider actually staying on after selling a business. You don’t have to work as much as before, but you can stay involved in your business and continue to earn income. For instance, you can create a consulting arrangement during the sale negotiations or stay on as a Chairman of the Board.
#5 Market situation is getting more intense
Suppose things are becoming more intense in the market – competition is getting stronger, new companies are entering the market, and your industry structure and market share are threatened. It’s normal to ask yourself, “should I sell my business?” In addition, if you don’t have enough capital and energy to fight the market war year in and year out anymore, it’s highly likely things won’t go well for your company.
Your business worth may decline in proportion to a decline in your revenue and cash flow. If you don’t develop a “fighting” strategy, your business will experience losses, and you’ll be forced to sell it eventually for a much lower price in the future. Therefore, if selling is an evident option, it’s better to sell your business now when you still have something valuable to sell.
#6 You are risk-averse
The show must go on, and the business needs to grow. The status quo is not something that you’ll encounter in the business world. You either ascend or descend. Business trends and market situations tend to change often. Growth implies adapting to both external and internal changes, taking chances and opportunities, but all that doesn’t come without risks.
The longer you are in the business, the fewer risks you are probably willing to take. When the company is in the early stages and doesn’t have much value to lose, business owners are more confident and prepared to find themselves in risky situations. As the value increases, so do the risks, and owners fear more significant damages. If they are older, they won’t have luxurious time to recover the business from wrong strategies and decisions, so they’ll rather avoid taking high-risk actions.
You need to think long-term. If you are willing to take on almost any risk, stay in the game and work on your company’s growth. But, if you are highly risk-averse and if you won’t be able to keep up with the changing market conditions and increasing competition, maybe it’s better to sell your company and transfer the risk to someone else. Sell it as soon as possible before your company’s value starts to decline.
Also read: Top 3 Deal Structures to Maximize Your Business Sale Price
So, these were some of the many reasons a business owner may encounter when contemplating selling a business.
Based on the previous statements and more, we can conclude that selling your business will help you lock in your profits, cut expenses and losses, invest in other projects, get more free time, and earn a lot of money in a short time. On the contrary, keeping your business means that you’ll continue with regular profit (or losses), managing your employees, investing your time, bearing the risk of industry changes, and potentially losing income resulting in lower sale prices.
Before you finally decide to sell and begin the whole process, there are more things you need to consider.
What To Consider Before The Final Decision?
Selling a business can be the best decision for both you and your business’s future success. You may want to walk away at one point in time, but we are sure you don’t want your company to dive into losses and for all your employees to lose their jobs. You want something you worked hard on to live long after you. Before you finally decide to sell your business, there are several things you need to take into account.
- Your personal & professional goals. Will you achieve your personal, financial, or career goals if you sell your business? What else can you achieve? What will you do after the sale?
- The opportunity cost of selling or keeping your business. What are you gaining, and what are you losing in each case?
- How much you can get from the sale. If you sell now, will you have enough money for the next step in your life or career? Could you live off the proceeds you get from the sale of your business? Ensure your business reaches the highest value possible before you sell it.
- Is your business ready to sell? Are your accounting records and other documents cleaned up? Do you have defined standard operating procedures?
- Your current business value. A logical step before selling a business is to determine the accurate business value and see how you can increase it to the maximum in order to build a higher sale price.
- The right time to sell. You have to be aware that you won’t sell your business fast. It takes time. Time plays a significant role, so take into consideration that you must start on time and cannot procrastinate once you begin with the whole process.
Now, assuming that the question “should I sell my business” resulted in a “yes” answer and you have decided to sell your company, the next logical step is to start planning an exit and work on a business exit strategy.
“I Should Sell My Business, But How?”
Deciding whether to sell your business or not must have already been hard for you, but the selling process doesn’t have to. We always say, “When you’re about to sell a business, look for the right team first.” If you hire the right company – M&A advisors (if your revenue is above $5M) or business brokers (if it’s less than $5M) – you will for sure sell your business easily for the best price.
Therefore, the first step is to find a company that provides M&A services and let their experience and knowledge do the best for you. Experts at Final Ascent are here to help you and guide you through the entire process – from initial valuation and assessment to closing the deal and selling your business for the maximum value.
After we learn more about you and your business, our business valuation experts will evaluate its worth. The next step is exit and strategy planning, including the post-sale strategy. Together, we’ll come up with the best business exit strategy in order to build your business into a ready to sell company.
When we recast your company’s financials, analyze the risks, and prepare initial confidential information memorandums (“CIMs”), we will market your business and look for the most qualified buyers. Once we succeed at identifying the best buyers for your business, we will assist you in negotiating the best price and closing the deal under the most favorable terms.
We will be there for you at every stage of the selling process, advising you and helping you with everything needed, from day one to a wealthy lifestyle.
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At Final Ascent, we focus on providing mid-market M&A advisory services. Most clients we help sell their businesses in the range of $10 million to $150 million. By working with one of our trusted exit planning advisors, clients know that they have maximized the value they can achieve when trying to sell. Our M&A advisors then “take the company to market,” using a tried and true competitive bid process system. By working on fixed timelines and driving numerous buyers into competition with each other, business owners can rest assured that they have achieved maximum value in the sale.
Sell your business the right way with us.