Knowing when to sell your business is often a much more complex decision that simply thinking, ‘Right. It’s time to sell up’. Often the most successful business sales have been planned for at least two to three years prior to the sale. But conversely it is also important to remember that just because your business plan tells you that it’s time to sell, it still might not actually be the ideal time for either you or your business.
So how do you know when is the right time to sell your business?
Profits Are Up
It may feel counterintuitive, but selling your business when profits are looking good and you feel that there are even better things coming round the corner can ensure that your business is a really attractive prospect to potential buyers and thus fetches you a fantastic price. This is in comparison to waiting until your business has passed its peak and you have to accept a much reduced offer.
However there can also be ways of successfully selling your business even if profits are beginning to take a nose dive or you can sense that the market might be moving against you. For example taking steps to shift the direction of the business away from potential areas of concern, or investigating diversification opportunities, could show buyers that there is still money to be made in your business. Finding any way to show buyers that they can add value to your business is always a big selling point. However it is always worth remembering that your window for action in any less positive situations might be short, so moving quickly to implement effective plans is imperative.
You Are No Longer An Asset To Your Company
Regardless of how much you love your company, there often comes a time when you have to take a step back and properly assess what you are continuing to bring to the company. Many business owners who have built their company up from scratch may find that as their company grows their personal skillsets are no longer required in the role of owner.
For example you may have exceptional sales skills that have been the backbone upon which your company has grown. However these days you have a crack sales team in force and you are left floundering in the face of complex financial decisions and HR issues. In this case, maybe it’s time to get a reward for all of your hard work and hand the reins over to someone who has the requisite skills to take the company through the next stage of its life.
A Lucrative Opportunity Presents Itself
Again this is a situation in which business owners need to let go of their personal feelings. They may have a fantastic idea or concept, so good in fact that one of the market leaders comes knocking at their door. Whilst the idea of letting go of the business that they have worked so hard to build may feel like a bitter pill to swallow, but letting it go to someone who has the resources to invest to really make it fly, is actually the best thing for the business in the long run.
You Have Fallen Out Of Love With Your Business
This is a situation that many business owners find themselves in. After years and years of hard work building a company up, they simply find that running it day to day has lost its appeal. This is a potentially dangerous situation to find yourself in, as once you have lost your passion for the business you are less likely to commit the time and effort required to circumnavigate challenges, source new opportunities, and monitor the minutiae required to keep your finances on track, and the inevitable consequence is bad decision making and the slipping of standards.
In this situation it is vitally important for business owners to have the necessary self-awareness to recognise these signs before the problems really start, and to sell the business before profits start to fall and the business is no longer such an attractive proposition to potential buyers.
Is Your Business Ready To Sell?
One of the most important steps is to ascertain if your business is actually in a truly saleable state? Do you have at least three years of robust accounts showing healthy profits and a streamlined operation? Do you have incentivised key members of staff that are willing to stay on after the sale and help to support the business through this next stage? Is the market on your side? Are you, as the business owner, still imperative to the day to day running of your business, or have you been slowly extricating yourself over the past few years so that your transition out of the company with be seamless?
If you answer no to any of these questions then it may be worth looking to address these issues before you do anything else. And once you do believe that the time is right for you, contact Selling My Business. Our business sales experts have over 30 years’ experience and have raised more than £500 million in business sales. Our experience and expertise allows us to fully assess your businesses readiness for sale, and if it is we can fully support you throughout the entire business sales process.