If you are a business owner, then you will have unquestionably asked yourself at some point or other whether it is time to sell your business. There are a number of key factors that are attached to your decision and it is only natural that something with potentially huge repercussions will be agonized over for a long period of time: weeks and even months in some cases.
To make the process simpler, you could break down your decision into three different areas. However, all should be considered equally, before making a final decision whether it is time to move on.
How Do You Feel?
Are you reaching a stage in life where you are beginning to think of retiring to the golf course or a foreign country? Perhaps your decision isn’t anything to do with age. You may be an entrepreneurial type who is brimming with fresh new ideas and just want to sell your current business so you can move on and do something else.
Think about these and any other factors in your personal life that could be influencing your business. Ultimately, only you will know whether you feel now is the time to sell your business; whether it is due to age and health reasons, financial matters, or simply the opportunity to explore fresh and exciting endeavors.
Where Is Your Business At?
This is probably the toughest bit, as no matter what stage you are at in life, your business might not feel totally prepared for a sale. Ensuring that your business is an attractive purchase for a potential buyer is not an easy task, but maintaining what has already made you successful is a good place to start. Here are some things to look at in your business before deciding to sell:
Financial accounts will probably be the first thing that any potential buyer will want to look at; and their findings during their own due diligence processes could seal or break any deal that has been agreed in principle. Ensure that all of your payments are up-to-date and that all incoming payments have been cleared with documentation provided that shows how often these are received, if necessary. If you are unable to provide even these basic documents, then any buyer will have grave doubts about the financial stability of the business you are looking to sell.
While your financial accounts will ensure the here and now of your business is visible and transparent, you will also need to demonstrate a sustainable future to any buyer. Writing a business plan when you are looking to sell a business might not be the first thing you want to do, but it will demonstrate the potential within the business and offer a potential critical path to any new owner. Your plan may relate to growing sales, reducing business expenditures, moving into new markets, or any other aspect that could serve the business well into the future. If a potential buyer can see the opportunity in front of them, you will have a much easier time selling your business.
One thing that many business owners fail to consider is their own exit strategy from the company. While it is understandable that you may want to sell and get out as quickly as possible, you still have a duty of care to your management team and employees to ensure that they are impacted on as little as possible by your departure. Setting up a timeline for handing over the business so that there is a smooth transition from yourself to the new owner, will ensure that the day-to-day operations continue to run as smoothly as possible.
What's Happening in the Global Markets?
What's happening in the global markets could hold the key to a large portion of your decision. How attractive your business is to any potential buyer could depend as much on the global markets as it does your business performance.
Do the financial markets mean that a potential buyer is unlikely to be able to secure financing, for example, is one aspect that may need exploring. If your business requires a certain product or commodity, the price of acquiring this may also come into the equation, as well as how your industry is performing in general around the world. Your clothes production business may be booming, but if manufacturing is under-performing, will it be a risk worth taking?
At the same time, you should also consider whether you could potentially sell your business to a larger company or global organization. For example, say that you are a local business specializing in a particular product or service and have done very well due to the fact that your large competitor across town doesn't offer it, or you're the only business in the country that can offer them. Perhaps the easiest way to secure your business legacy and ensure the ongoing success of your business would be to invite a large company to buy your business.
How would you go about doing this? It actually wouldn't be as difficult as you might think. So long as you can prove that your business is in a strong position both now and for the future, as explored earlier, a large company would certainly consider the opportunity to take your business off your hands in the name of adding value to their own operation.
The Final Decision
Deciding to sell your business, having put so much into it over a period of many years, is never an easy decision. However, by considering your personal, business and market situation, you can make a sensible decision, both for you and your business.