How Do You Know When It’s Time to Sell Your Business?

For dedicated business owners and entrepreneurs, the thought of handing over the keys to something into which you’ve poured your blood, sweat and tears can be a terrifying thought. However, until we find the fountain of youth, coming to terms with selling your business will just have to remain a fact of life. Here are a few signs that might indicate it’s time for you to sell your business.

You’ve Had Enough Risk

Risk is an inherent element to owning a business. There are no companies that face a zero-risk environment—be it from competition, changing business climates or disruptive technologies. Managing and mitigating these risks for years—or decades—can become a tiresome affair.

Risk is one of the great ironies of business. As your company grows and realizes success, it’s also accumulating risk. The repercussions of a PR disaster, or mismanagement, has much more negative potential for a company like Apple than a startup with three employees. There’s simply much more to lose when you’ve already gained a lot. When you reach a place where you want to start limiting your risk exposure, it might be time to sell your business.

Someone Wants to Buy Your Business

If you’ve led your company to a position in which suitors want to buy it, you should think long and hard about their offers. Of course, just because someone’s interested doesn’t mean you must sell. There are a few aspects that you should consider before pulling the trigger, such as:

  • Is It the Right Buyer? While some people might not consider this aspect important if the price is right, selling your business to someone who doesn’t really understand or appreciate it is something you potentially might regret later in life. Longtime family-run businesses especially need to consider the viability of potential buyers.
  • Are They Offering a Good Price? If a potential buyer is making you an offer at or above what you value the company, you should consider the offer no matter how much you like being the boss. That money could easily catapult you into starting another business.
  • Are Your Books in Order? Before any reasonable buyer pays you anything, they’re going to want to see your business’s financial records. They’re going to want to see a list of your assets, the types of business insurance you use, accounting statements and a litany of other information. Make sure your numbers all check out, or risk scaring away buyers.

You’re Anticipating Market Changes

There are several ways markets can determine if it’s the right time for you to sell your business. The nature of your business dictates its reactiveness to changes in broader equity markets. However, almost all businesses suffer during down periods and recessions. If you anticipate a downturn in the markets, it might be a good time to sell your business, especially if you were already considering it.

Changing sector climates can also determine if you should consider selling. Disruptive technologies and companies are responsible for turning entire industries upside down seemingly overnight. If you see your business as susceptible to disruption, it might be prudent to get out too early rather than too late.

Ultimately, it’s your decision whether you’re ready to sell your business. If you’re still passionate about coming into work every day, maybe it’s not worth selling even if that’s objectively the best decision.

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