At some point, small business owners are likely to consider selling their business. Whether it’s a position they have been forced into, or it’s part of their exit strategy, 60% of business owners plan to transfer their ownership interests within the next ten years. Whatever your reason for thinking about selling, it can be difficult to know the right time to do so. There are various signs that suggest the time is right, and if you know what to look for you should be able to sell your small business.
Strong profits and recent growth
The absolute best time to sell your small business is during a period of strong profits and growth. If you’ve had 1-3 years of constant growth, buyers will be very interested in acquiring your business.
For this to happen all your financial and legal paperwork needs to be in order. Potential buyers must be able to assess and evaluate your business and the year-on-year revenue. Seeking the aid of a professional broker who can value your business, like those at Digital Exits, can help you get the necessary paperwork in order and maximize the value of your business.
The market is moving against you
Keeping an eye on industry trends and emerging technologies is important for businesses for a range of reasons. For one, they could help expand your business, but more threateningly, they could seek to disrupt your industry, potentially making your business irrelevant or marginal.
In theory, this might sound obvious, but finding these trends early is crucial for a successful sale. It’s also difficult for many entrepreneurs to accept that the company they have built up might no longer have a place in the industry. One must understand that in today’s technological society, this is a possibility for nearly all businesses and so they must be on the lookout and prepared for a sale before their business is worthless. Once this risk is identified, one should move quickly in the hopes of maximizing their sale.
There’s a lucrative deal on the cards
On the other hand, if the industry you are in is gaining a lot of traction, or similar to our first point, your business is experiencing success, it can also be a good time to sell. You need to consider just how far you can take your business. A lot of the time big brands can look to acquire smaller, emerging companies. If a reasonable and tempting offer is made, selling your business could be the right choice.
The company has outgrown you
This is another hard situation for business owners to accept but it’s also a great time to sell the business. Again, this point is closely related to the first point, but when a business is rapidly growing, it can move past the owner’s abilities and skill set. The best entrepreneurs can see when this is happening and are happy to pass the reigns
Of course, in a situation such as this, one doesn’t usually sell the business and give up total control. Often an owner will sell a portion of the company where they remain a significant shareholder but no longer have to deal with the day-to-day business.
You’re not enjoying it
For a whole range of reasons, entrepreneurs can find themselves in a position where they’re simply not enjoying it anymore. This could be due to the innate stress of running a business but it could also be because their business has grown to the point that the challenges it poses no longer interest the owner.
In the startup stages, entrepreneurs have to deal with problems like financing, payroll and even securing clients. As the business grows, however, the problems tend to shift toward HR and personnel issues. These problems aren’t what most business owners got into business for and their passion begins to fade. For this reason, it’s an obvious time to sell.
Selling your business is a huge part of the business and your own life. The reasons can range from the positive, such as profit and growth to the more negative where a business might be impacting one’s health. Knowing the right time to sell, and understanding the selling process is important in a successful sale.
About Author:
Rachel is a mother of 2 beautiful boys. She loves to hike and write about traveling, education, and business. She is a Senior Content Manager at NYBizDb – an online resource of relevant business information.
