When is the "Right" time to sell?
Good timing is critical when selling a business...
It can make the difference between getting your desired price or settling for less. Don’t sell your business without careful planning and consideration. A bad day, week or even a bad fiscal year shouldn’t make you part with the company you spent so long building. Consider long-term problems before putting your business on the market, such as industry changes and market conditions.
Answer these questions to determine if it is the "Right" time for you to sell your business or if you should wait:
Do you have a better business opportunity elsewhere?
When the market is on your side, the decision to sell is easy. A leading company in your field may express interest in buying your small business when your industry is hot and you have a buzzworthy reputation. Consider all serious offers, and work with your team to make sure all legal paperwork is ready for a quick sale.
Is my business ready for sale?
Your company needs to be running smoothly before you can even think about putting it up for sale. A disorganized business won’t attract qualified buyers. Prospective owners want to see a profitable business, with a top-notch product and industrious employees before they’ll part with their hard-earned cash. You’ll need to show buyers at least two to three years worth of tax returns and make sure your books are up to date.
Are you always burnt-out and overwhelmed?
If your passion has fizzled out, and you dread heading to the office in the morning, you may need to sell – or choose a new CEO and resign. When an owner lacks enthusiasm for his or her company, employees know it, and it may affect their work or cause them to look for another job. When the boss doesn’t care, why should they? Plan an exit strategy to preserve your sanity and the value of your business.
Do you have a clear vision (and business plan) for your company?
It’s not enough to have a good idea, you need to execute it with purpose and panache. Are you working with your creative team to develop profit-boosting strategies? This is especially important in tech, fashion and other competitive industries. Businesses with a bland, middle-of-the road approach often make less money than innovative businesses. It may be better to sell your business when it’s doing relatively well, rather than wait until newcomers steal your thunder.
Are market trends threatening your business?
Changes in trends and technology affect all businesses, from the laundromats to hotels and book stores. Follow market trends and adapt your business to keep up (or exceed) what the public expects from your particular niche. While some businesses can stay afloat “the old-fashioned way” for awhile, it’s not a good long-term strategy. If you’re unable or unwilling to update your business, it may be time to work on an exit plan.
Is the economy on your side?
You’ll snag a higher price for your business if the economy is booming, or at least doing moderately well. People are more apt to buy businesses when consumers (in general) are spending money and interest rates are low. When it’s a seller’s market, you can ask any reasonable price for your business and get it (provided you’ve presented your company in the best possible light).