It can be difficult to know when the right time to sell your business might be. For a business owner with a company that is in good shape financially, this will always be a matter of guesswork. You have to compare the known (your company’s past and present performance) with the unknown (your company’s future performance) and decide based on how you think those two measure up. Recently Entrepreneur posted an article on this subject called “Why You Should Quit While You’re Ahead,” which we found interesting. Here we will discuss several scenarios in which selling may be the right option, even when your company is flush with success.
Scenario #1: You’re the type of owner who likes to start and build businesses rather than maintain them
Some entrepreneurs are well suited to starting things. They love the rush of a new idea. The effort required to build something meaningful never feels like work to them. It feels like fun. However, the personality and skill set necessary to make something out of nothing are different than those necessary to take care of an existing business. There may be more profit in the 10% increase between years 9 and 10, but being tied to a desk and forced to deal with employee problems and mundanity drives some people crazy. If that is the case, selling sooner rather than later can be a good solution for both the owner and the business.
Scenario #2: You’ll be selling anyway eventually, but you’re not sure when
Many Baby Boomers know they will be retiring within the next several years, but they don’t know when the best time to sell would be in order to get the most money for their retirement. As of right now, the market still looks promising into 2016, and both buyers and sellers have confidence that they will be able to make the deals they need to make. Whether the market will continue on this path and banks will choose to extend the necessary credit later in the year or into 2017 is more unpredictable. If it’s just a waiting game for you, selling your company now may be better, especially given the recent volatility in the stock market and fears of a global slowdown.
Scenario #3: Your business is making good money
You might think that holding on to a money making business is not only a good idea, but the only one, but selling a business that’s succeeding is infinitely easier and more profitable than selling one that’s stalling or losing money. Take a careful look at the market, your competition, and your own circumstances and try to assess whether any of them might falter and affect your ability to maintain your company’s performance and profitability. If the answer is yes, make plans to sell before this can occur.
Does any of the above sound familiar to you? If you have any questions about how attractive your business would be on the current market and you’d like to talk to a professional, Calder Capital would be happy to set up a meeting with you and discuss what steps you need to take to prepare for a sale now or into the future. It’s never too early to get all of the facts about this critical aspect of your life and financial future. Even if you do not decide to sell now, knowing the value of your business, as well as its strengths and weaknesses can help you in guiding it to even greater success.