Have you ever thought about selling your business? There are lots of good reasons to sell your business. You might be ready to retire or you might be looking for new endeavors to conquer. You might need capital for another project. Or maybe things just aren’t turning out quite like you thought they would. You can’t always control when these types of events will occur. But did you know that timing can make a difference when you sell your business? How can you sell your business at the right time for maximum profits?
During the time that you own your business, you may have several opportunities to sell your business for an attractive profit. However, there are also certain time frames that you might want to avoid putting your business up for sale. The decision to sell should not be emotional, although sometimes this is a difficult rule to follow.
It’s probably not wise to try selling your business shortly after starting it. Many potential buyers of your business are interested in an established company instead of a start up operation. Businesses are more likely to fail when they are very young. The whole point of buying an established business is that it is, well, established. The longer you have owned your business, the more likely you are to receive a higher price.
The best time to sell your business for maximum profits is when things are going really well. This may seem self-evident, but you would be surprised how many business owners become discouraged during an economic downturn and end up selling their business for a pittance. However, it’s not quite enough to just be doing well. You really need to be outperforming your competitors, or at least keeping pace. Any investor who is interested in buying an under-performing business will be looking for a bargain. And a bargain is never very much fun for the seller.
Do you see some negative changes on the horizon? There may be situations in which unbeatable competition is moving in,
times when regulatory changes that will hurt your profitability are pending, or other situations over which you have no control. If you can see the handwriting on the wall, then it’s essential to try selling your business before everyone else can see it too.
How is your industry doing in general? Technology changes rapidly and your product may be eclipsed by “the next big thing.” If progress is squeezing you out of the marketplace, you need to sell as quickly as possible.
Industries tend to go through upswings and down swings, booms and busts. Do you want to guess when it’s the right time to sell your business? You got it — businesses sell more quickly and for higher prices during economic upswings.
Sometimes personal or internal circumstances will determine when it’s the right time to sell your business. If there is a family member who happens to be capable and willing to buy your business, that may have advantages over selling to a stranger, even if you don’t get the best price. This business will stay in the family and you might even get to stay on as a consultant.
You may have identified a new opportunity and you need cash now seize the moment. Even if the external situation is not optimal for getting the maximum price for your business, you have to balance that against the cost of lost opportunity.
Sometimes it’s not about the money at all. Many entrepreneurs start new businesses purely for the thrill of accomplishment. After a certain point, an established business loses its appeal and excitement even if it continues to be profitable. If this sounds like you, there’s no rule book that forces you to stay in a situation you find boring or unsatisfying. Even if it’s not the best time to sell your business, even if you won’t make maximum profit, it is, after all, your business. You should be able to do what you want.
You may be reaching the age of retirement (whatever that age happens to be for you). If the sale of your business can provide the funds you need to maintain the lifestyle to which you’ve become accustomed, then you may not be willing to wait for the stars to line up perfectly. Sometimes the best time to sell your business is when it’s best for you.