While some entrepreneurs aim to run their businesses for life, others aim to sell their business for profit. Many entrepreneurs are forced to sell their businesses because of personal or business hardship. This could be anything from cash flow issues, high-employee turnover, to dealing with health complications.
Whatever the reason, selling your business is not a casual decision. Additionally, the process of selling a business is often lengthy and fraught with landmines – especially if it is your first time. You might not know the dos and don’ts of the selling process, or if it is a good idea to sell your business. Well, you don’t have to fret about that anymore. While it is impossible to cover every facet of selling a business in a single sitting, here is a brief guide on selling your business:
When is selling a good idea?
When you are starting, the idea of someone selling their business might seem crazy. Why would someone build something awesome and leave it? It might seem more unfathomable that someone would sell a highly profitable business.
But when someone makes the decision to sell, there is usually more to consider than the Return On Investment (ROI). Here are some of those considerations:
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Better Opportunities: Although you have a great business, you might feel that you should focus on other opportunities elsewhere. For example, you might have other businesses that demand more of your time and have more potential for growth and expansion. In such a scenario, you should evaluate your businesses and sell the one that has the least potential.
Tired of risk: In the early stages of running a business, you might be more confident about taking risks. This is probably because in the early stages, you do not have much value in your company to lose yet. But as your company grows, it is natural to become more conservative because you have more to lose. If you are an older business owner, you might feel that you no longer have the luxury of time to fix damage. You avoid any risky decision that might lead to losing of your company. In such a scenario, exiting from the business while it is profitable is a great move. You will be able to sell it for maximum profits.
You are suffering burnout: For a business to be truly successful and meaningful, the owner has to be passionately committed. When you find yourself mentally checking out or suffering from burnout, it is only a matter of time before things start deteriorating. In such cases, selling your business when it is still vibrant is better than watching it die slowly over time.
When is selling a bad idea?
Selling your business is not always a good idea. Sometimes, the timing or the reason behind the move might make you have regrets soon after signing the dotted line.
Here are some reasons why you should reconsider your desire to sell your business:
You are still passionately invested: If your business is your passion, you might feel emotionally invested in it, even after completing the sale. After the initial excitement of selling, you may deeply regret it. You may realise that you gave up not just a business, but your life’s passion. If you sold your business to a larger company, you will be distressed watching as they turn your life’s passion into a mere product or kill it altogether. If you are deeply attached to a business, it might be a bad idea to sell.
You want quick money: Are you selling just because you are excited about the idea of cashing in? Sure, seeing a big balance in your account is exhilarating. However, this excitement quickly wanes as you realise you no longer have your business and the purpose it brought to your life. Carefully consider what you want to do with the money and your life after the sale.
Your employees will lose: In the initial stages of acquisition, your employees might be told how valuable they are. However, in many cases the employees are let go a year or two after acquisition. If you have loyal employees, this might make you question your desire to sell.
The process is stressful: The selling process can be very stressful. It includes having your business professionally valued, listing it on the market, vetting interested buyers, negotiating terms of the sale, and training them for a smooth transition. Although you can finalise selling your business in a month or two, when done properly, the process can take anything from six months to two years.