With the end of another calendar year rapidly approaching, it’s common to think about what the next 12 months will bring. It’s a perfect time for reflection and contemplation. What changes will you make in your business next year? Could it be time to start planning your next move? And how do you know if now is the right time to sell?
When running your business becomes stale, unchallenging and your mind wanders to all the other things you’d like to achieve in life, you might feel a little uneasy. The decision about when to exit your business is a huge one, particularly if you employ a team and you have other people’s livelihoods to consider. Well, we’re here to tell you that’s not a good enough reason to carry on with waning motivation. Your business may have reached its sell-by date without you even realising.
“I’m waiting for the right time”
We hear this sentence more often than you’d imagine. Not all business owners are decisive, particularly when it comes to selling a business to which they are emotionally attached.
Are you guilty of hanging on for ideal market conditions in order to maximise sale profits? Waiting for the right time or for market conditions to be ‘just right’ could mean you wait too long and miss the boat entirely. What goes up in value today can easily fall again tomorrow, just look at the stock market. Playing the waiting game is a risky approach.
As with any major decision in life, there may never be a right time to exit your business. Waiting for the right time is simply an excuse to delay the inevitable. Let’s explore four ways to help you identify if your business has reached its sell-by date.
Your business has reached its sell-by date if…
Keeping it would risk your financial freedom
By this, we mean does the value of your business represent a significant proportion of your overall personal wealth? If you rely on business income to fund your current lifestyle, perhaps its time to cash in, diversify your investments and spread the financial risk. Most exiting business owners set aside a proportion of sale profits to fund their next steps in life, whether that’s a new business investment, a dream holiday or retirement. Is it time you took advantage?
Your business has reached its sell-by date if…
You are tired and/or have health problems
Owners tend to be crucial cogs in the workings of their business. Therefore, if an owner experiences a health scare and has to take time off work, business performance is likely to suffer. The best course of action is to plan to sell before your health begins to wane (and to make enough profit to allow you to enjoy later life).
Fatigue affects us all, however business fatigue can have a detrimental impact on business performance and business value. If you feel yourself losing energy and enthusiasm for the business you’ve built, consider making an exit plan to work your way out. Creating your personal business exit strategy could be the difference between reluctantly soldiering on and living your best life.
Your business has reached its sell-by date if…
You have unachieved ambitions
Do you ever find yourself day-dreaming about pursuing another ambition in life? How strong is that pull?
A lot of business owners think this way and then quickly pull themselves back to reality because of the responsibility they feel towards their business, staff and customers. Having ambitions outside of your business is not selfish. Nor is selling your business. If you would like to release yourself from this mindset, perhaps its time to discuss planning your exit strategy.
Your business has reached its sell-by date if…
You’re on a high
They say to always leave on a high and exiting your business when it’s performing well is a classic example. Many owners thoughts turn to selling when their business is starting to struggle, or when they lose a big contract or a key member of their team. This is a bad tactic that generally results in a lower business valuation and profitability.
Is your business approaching its sell-by date?
If you ticked one of the above, maybe we’ve planted a seed of an idea. If you ticked two or more, it might be time for a conversation with a reputable business exit consultant before your business goes past its sell-by date.
Positive signs for a profitable business sale
Taking a proactive, planned approach to selling your business is more professional and profitable than reacting to a (potentially challenging) situation you find yourself in. In summary, here are seven clear signs the time might be right to sell your business:
- Revenue is growing
- Gross margin is improving
- Cash flow is stable
- Your team is stable, engaged and motivated
- You’re consistently getting a flow of new, happy customers
- Supplier relationships are healthy
- Future prospects are rosy
We can help design your ideal business exit so it works for you, your family, your colleagues and customers. If this post resonates with you, please get in touch.
