You never know when you may want to Sell your Business
Most business owners share a common dream…
You work hard over many years building the business – sweating, planning, risking it all – until that perfect day…the day you are ready to sell,
when the ideal buyer rides up on a white horse, hands you a big bag of money and says, “Good job. Now it’s my turn!” Sweet!
Okay, it’s time to wake up!
That may be the dream for most of us, but that is not the way it usually works in real life.
First off, if you think you can control the timing of the sale of your business, think again.
Businesses are sold when opportunity, desire and timing align. And getting these three elements into alignment is not easy.
Here are just some scenarios that may arise, several from my own experience as a business owner or that of clients since I’ve become a business broker:
Opportunity– A potential buyer appears out of the blue and offers to buy your business through an unsolicited offer.
Chances are that if buyers are coming to you, business is good. You are riding a wave of prosperity that you hope will last forever and you don’t want to get off that wave. If you were to sell, you would want to be sure that the buyer pays top dollar, plus a little more. Your current success blinds you to the realities of the market.
Desire – You’re ready to sell your business.
You’re tired of dealing with the day-to-day issues, you’re getting older, the economy stinks, whatever. Again, you’re ready, but where are the buyers?
Maybe the business isn’t performing at its best; maybe it needs capital or updated technology and/or equipment.
The wave you were riding in the case above has hit the beach and gone back out to sea. Your memory is long, however, and you remember the “good old days” clearly. You may expect a price more in line with what the business was worth in its heyday – more than the business is worth now.
Once again, emotions get in the way.
Timing – Business is cyclical.
We’ve certainly all experienced that in the past several years. When the cycle is on the upswing, you are less likely to think of selling your business. When the cycle is on the downswing, however, selling seems like a much better idea.
Experts suggest that the best time to sell your business is half- to two-thirds of the way up in the business cycle.
Finding the “perfect time” to sell is like timing the stock market… most folks lose.
Don’t be! All I’m saying is that there is a strong probability that you will not exit your business exactly when you expect and for exactly the amount of money you need.
Your dream may quickly turn into a nightmare where you aren’t in control, and that’s a scary thought.
There is an answer to this dilemma, however.
The answer centers on desire. Determine if you have the desire to sell your business at some point in the future – and let’s be realistic, at some point this will need to happen.
You need to define your “someday” and begin planning for “someday” today.
It’s not that hard to do, especially with the help of a qualified, experienced business broker who focuses on relationships rather than transactions.
Run your business as if you were going to sell it tomorrow:
- Take care of those business improvements you have been putting off.
- Upgrade your systems.
- Keep meticulous financial records following accepted accounting principles so anyone can understand the complete financial picture.
- Strengthen your workforce.
The timing of the sale will then be in your control.
You will be ready should the opportunity to sell your business arise and be in a position to extract maximum value.
When you are prepared, you have the most influence over the outcome.
By defining your desire and taking steps along the way, you are in the best position to capitalize on opportunity whenever it arrives.