The decision to sell your business deserves a great deal of time and consideration. Even with consideration it can be extremely difficult to answer the question of when should you sell your business.
The best way to decide when to sell your business is simply exiting when you are ready. The other factors you should look for are; a high market value within your industry and when there is interest from a strategic investor.
Whatever your reason for selling is, just make sure it is not because you need to. It is of the utmost importance that you are prepared and have an exit plan in place for your business. Far too often business owners get caught off guard and end up selling for way less than they could have.
In this article we will cover the best times to decide to sell your business.
High Industry Value
Sell when the market is hot! The best time to sell your company is when there is a high demand for businesses in your industry. This is the goal of investing in anything. It is not as easy as it seems because in times of prosperity people do not think it will ever end. The specifics of when an industry is of high value will vary depending on the long term outcome.
A fidget spinner company would’ve been worth far more, regardless of current revenue, a few years ago versus today. That’s cause the public’s attention is what drove that industry’s growth, and when that faded so did the investor interest. On the other hand, an auto insurance company with 15 years in operation, would provide a more stable and consistent market.
Interested Strategic Investor
You may get interest from potential buyers at some point during your ownership and I would recommend to at least hear people out. Don’t waste your time on every person that contacts you but in the case of a strategic investor, it would be a good idea. Strategic investors are always looking for an aspect of your business that they can add to theirs. This means they think something you are doing or have will help them and that puts you in a strong position to negotiate.
Strategic investors are often willing to pay over listing price because what they want is not based on your companies financial performance.
When You’re Ready
The best to time determine when you should sell your business is when you are ready. It is your business and you built it, so you should exit when you want to. Only about half of all business owners have an exit plan in place. This is concerning because that means half of all small businesses are not being run to maximize the owner’s investment.
Make sure you have a plan and then let yourself decide when the time is right. It has been your project and most likely you have controlled every aspect of it’s growth. So, decide to leave when you are ready and avoid scenarios where you are pressured to sell early.
So, When Should You Sell?
The decision is a tough one and there is no right answer. It is completely individual to you and what you want. The only thing you want to make sure that you do is maximize your desired outcome. Make sure that you are prepared to exit and then wait for when the time is right.
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