Business owners sell for many reasons.
Some want to collect on their hard work and go live their dreams, while others want to retire comfortably. Some want to move into another industry; others just want out of a poorly performing business. Sometimes, a family or personal crisis prompts their desire to sell.
If you’ve reached the point where you want to sell your business, can you explain your reasoning? Is it the right choice in your situation?
At Seiler Tucker, we help you decide if selling is the right decision, and then determine the perfect time to sell.
Common Selling Mistakes
The biggest mistakes that sellers make are not planning their exit strategy, not building their business in a way that makes it attractive to buyers, or not having a timeline. These all lead to them failing to achieve their desired sales price.
Timing is critical if you want to receive a top selling price.
There are thousands of business owners planning for retirement every day. The majority will not be able to sell for what they need to enter the next chapter of their lives. Many will end up selling for pennies on the dollar, closing their doors, or filing for bankruptcy. Don’t be one of them!
Here are several exit situations:
- Pass on your business to trusted colleagues and employees
- Go out of business
- Be forced to quit due to health or legal reasons
Here are several reasons to sell your business:
- Spend more time with your family
- Retire and spend time volunteering or working on hobbies
- Enjoy the life you always dreamed about
Putting These Tips to Use
First, you need to figure out what you’ll do after you sell your business. Then, you can determine how to exit your company on your own terms.
Business exit planning is difficult when you don’t have a strategy. As a business owner, you need to know what you’ll do after selling your business. You’ll be writing a new chapter for yourself—whether it’s as a retiree or beginning a new career.
Focus on how to build your business so you can sell it when the time is right. You need to have an end game with a desired price in mind. Then, devise a plan and reverse engineer it to achieve your objective.
As a business owner, keep in mind that a buyer wants to purchase a business, not a job. The key is to make sure your business operates under a strong management team so that YOU are not the business. One person cannot make all the individual parts of an organization work together on their own.
Ask yourself if your business is strong enough to sustain itself if you leave for a couple of days, weeks, or months. If the answer is yes, then you’re on the right track to ensuring that your business can sell for its optimal value one day.
And when exactly should you sell your business?
Timing is one of the most important (and often overlooked) considerations in the selling process. Companies in a negative phase of their business (with stalled or negative growth) could end up with little to nothing at the end of the process. Knowing when to sell your business is one of the most important decisions that will affect your sales price.
Making the Decision
Ask yourself the following questions to decide if and when you should sell:
- Do you still love what you do?
- Are you still working on your business and trying to improve it?
- Are you still creative and able to grow your business to the next level?
- Is your business trending up?
- Are you making a profit?
If you answer “yes” to most of these questions, it means your business is still in the positive phase, which can be a good time to sell.
Then, ask the next question: If the company is still profitable and growing, should I sell it? The answer to this depends on your personal and financial goals.
The best time to sell, as strange as it sounds, is when your business is doing well, when you still love your company, and when you’re enjoying it so much that you don’t want to sell! Whether you need help analyzing your business’s six Ps, deciding whether selling is the best option for you based on your personal goals, or determining the perfect time to sell, Seiler Tucker can help you craft your optimum selling package.
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