Selling a business can be the outcome of big decisions. These decisions may be financial, emotional, or physical. A business owner may choose to sell their business for these reasons:
· They think the future of their business is going down the wrong road
· They are not in the right mindset to run the business due to personal reasons
· They are physically unable to continue running their business
· The owner is planning to venture into a different business
· The owner has decided that selling would be a good business exit strategy
Whatever the reason may be behind this big business move, the activity will always involve meticulous decision-making. It is never easy for entrepreneurs to let go of something they built from the ground up.
However, in running a business, drastic decisions are always in the party. Big and small business owners are always put in situations wherein they must compromise for the good of the business.
In the case of selling a business, how do owners know when it is time to hand things over to new management?
How do you know when it is time to let your business go?
As mentioned, business owners have varying reasons as to why they decide to sell their business. Here are a few implications that back their decision:
1. When business is not generating enough income
To business owners, this should come as a no-brainer. A business can remain on a downward spiral for weeks income-wise, but the owner still will not decide to sell it right away. However, if the business is starting to create a mountain of debt for the owner, that is the time they decide to look for potential buyers of their business.
Running a business can be extremely costly especially when running out of the owner’s pocket. It can become more of a financial burden rather than a source of income when it remains on the negative side of income generation for a long time.
2. When the owner is planning to retire
While it is a popular act for business owners who are nearing retirement age to hand their venture down to their younger relatives, some prefer to sell theirs. This can be attributed to not finding a suitable candidate that they can trust to run their business, or selling the business was the plan from the start.
There are times that the original business owner works in their own business after the handover while they edge closer to their retirement age. It is a good option for original owners to find buyers who are willing to operate the business with the previous owner working under them.
3. When running the business becomes exhausting
Running a business, no matter the size, has always been a lot of work. In the early stages of running a business, owners are extremely enthusiastic about everything, from the planning to the daily activities involved in the management. However, it is inevitable to experience being tired of running a business. It may be exciting at the start, but as owners grow older and their priorities change — some things start to turn repetitive and stressful.
A burnout, whether physical or mental, is one of the reasons to sell a business. If the owner continues to push themselves to run the business while they are not in the right state, the business can cause them to go into debt.
Deciding to sell a business when the owner is tired of managing it may sound defeatist, but it is one of the best exit strategies there is when the owner is not motivated to run the business anymore.
4. When the business is going well
This may sound contradictory to the first item on the list but selling a business when it is at its height is a good move. It will attract more buyers and will have them fighting to acquire the business with higher amounts.
Buyers of businesses gravitate towards businesses that are sold in a good state. It gives them a sense of security that every penny they spend on the acquisition will be back in their pockets in no time. They might even think the owners are being impractical with letting their business go at such good timing.
In running a business, what was listed down is only the tip of the iceberg. Different business owners have varying opinions on when it is time to sell a business. However, what was provided are the ideal situations to sell.
Selling a business is a tough ordeal. Legally, financially, and of course mentally. There is a lot of paperwork to be processed when it comes to the process of putting a business up for sale and handing it over to a new owner. The paperwork, of course, comes with hefty filing fees. Hiring a business broker is one of the financial implications of selling. Lastly, the hours of hard work put in establishing the business can be an emotional roller coaster to some business owners.