Deciding whether or not to sell your business is a big decision. It's like choosing a path that could change your life. This guide will keep things simple and break down the key factors you should consider.
Your Goals: Start by understanding your long-term objectives. Selling your business should align with these goals. If it's essential to reach financial independence or explore new opportunities, plan your exit accordingly.
Internal Factors: Consider how selling your business may affect your happiness, burnout, and daily routine. Are you committed to the process?
External Factors: Think about the timing of the sale. Is it the right moment? How does industry competition play a role?
Value & Options: Determine the worth of your business and explore exit strategies. Is your business ready for sale? Is its value increasing or decreasing?
We can help with external factors and business value, but your personal goals and emotional considerations are decisions only you can make. Selling isn't a checklist; it's a thoughtful decision that blends facts and feelings.
Your Goals
First, think about your goals. What do you want for your future? Your goals can be personal (like spending more time with family), financial (like having enough money to retire), or related to your business.
Would Selling My Business Get Me Closer To My Long-term Goals?
First, consider your long-term goals to decide if selling your business is the right move. If selling can help you achieve those goals, plan your exit carefully.
If you aim to become financially independent, get your business valued, find ways to make it more valuable, and plan your finances and taxes accordingly.
If your goal is to start a new business or change industries, think about what you might be missing out on by staying with your current business.
Remember, time is limited, and you can only chase so many dreams in your life. Make sure your decision to sell aligns with your long-term goals, or you might not get the most out of it.
Is Selling My Business Necessary to Reach My Financial Goals?
To determine if selling your business aligns with your financial goals:
Define your financial goals.
Consider their place in your long-term plans.
Weigh financial goals against other priorities.
Decide how to use the sale proceeds.
Assess if diversifying risk is your aim.
If selling is needed, consult a financial planner for goal alignment and a CPA for tax
What Other Goals Can I Accomplish If I Sell My Business?
When considering selling your business, think about what you might miss out on. If you try to do too many things at once, it can make it harder to succeed.
For example, if your business costs you $500,000 a year in missed opportunities, selling it now for $4,000,000 might be better than waiting three years and losing $1,000,000. Getting advice from different people is a good idea, especially if your business is not doing well.
Internal Factors
Will Selling My Business Make Me Happier?
Are you truly happy? Is your business causing unhappiness? Would selling it improve your happiness?
Entrepreneurship has its ups and downs. Assess objectively, but beware of swapping one set of problems for another.
Evaluate if business issues stem from poor management or external factors. Switching businesses won't fix management problems.
Certain industries, like liquor stores or demanding services, may not foster happiness. If your industry affects your well-being, consider a change.
Would you keep your business if it made you happier or if you could restructure it? If yes, focus on your strengths. If not, plan your business exit.
Will It Help Me Feel Less Tired and Bored If I Sell My Business?
Are you feeling burnt out? Haven't you taken a break lately? Before considering selling, assess the cause of burnout and try alternatives.
Burnout is common when you don't rest. Selling may not be the only solution. Investigate the root of burnout; if it's related to team issues, improve skills or personnel.
If a vacation isn't enough, explore stress management or business restructuring. First, attempt relief. If passion remains low and change is needed after multiple tries, then consider a change.
What Will I Do With My Time After I Sell My Business?
What happens after I sell my business? It's not about money, but how you'll spend your time.
Many entrepreneurs need more time to think about life's big questions. To decide how to use your time, think about what's important to you.
Buying stuff might not make you happy. Think about what makes life meaningful. After selling, you can choose between buying or doing things that matter.
You might feel empty if you don't find something you love to do after selling. Sitting around and spending money won't fill the gap for most hardworking entrepreneurs. You need to find something you're passionate about to fill your time.
Do I Really Want To Sell My Business, or Did I Decide in a Hurry?
If you're sure, go ahead. But doubts may stick around, so take your time. Talk to friends who sold businesses, write down your thoughts, read, and think it through.
Selling isn't fast; it takes years to get ready. Don't rush and regret it later. Decide if you're sure or acting on impulse. If you need more time, think about it more.
External Factors
Is it the Right Time to Sell My Business?
Timing the sale of a business is tricky but achievable. The best moment is when your business and industry are at their peak. Seek advice from industry experts and consider economic cycles. Remember, perfect timing is rare. Align your goals with the business and market timing. Avoid selling during economic downturns. Ensure your revenue is stable or growing. If not, consult an expert before selling.
How Does Industry Competition Influence My Decision?
Is competition growing stronger? Are new players threatening my market share? Can I afford to stay competitive?
If competition is tough and you need more passion and funds to compete, exit quickly. Your business value declines with revenue and cash flow. Sell while it's valuable, as waiting leads to losing everything.
Value & Options
What's my business worth?
Your business is likely your most valuable asset, so it is essential to know its worth through business valuations. Regularly enhancing its value prepares you for unexpected buyers.
Consider diversifying your risk if your business holds substantial value and makes up most of your net worth. Start with a professional appraisal.
Knowing your business's worth helps you set a reasonable price. Without this knowledge, you might sell for less.
What Are My Business Exit Options?
Should I sell to family, management, competitors, or investors? Get a third-party assessment to uncover the best exit options.
Is My Business Value Rising or Falling?
If it's dropping and you lack the drive to turn it around, consider selling to avoid losing more.
Prepare your business for sale to maximize value and salability. Fix deal-breakers and focus on strengths. Calculate the ROI on potential changes, starting with the highest ROI.
Only some people can fully prepare their business for sale so that changes can continue during the sale. Expect a lower value if your business isn't fully prepared.
Exploring Your Options
Now, let's take a closer look at your options for selling your business.
Sell to Another Person: You can find someone who wants to buy your business and take over. This could be a family member, a friend, or someone in your industry.
Sell to a Competitor: Another business in your industry might be interested in buying yours. This can be a good option if they see value in your business.
Sell to a Business Broker: Business brokers specialize in helping people sell their businesses. They can find potential buyers and guide you through the process.
Close the Business: If selling isn't the right choice, you can also close the business. It means shutting it down and selling off any assets.
What's Next?
Once you've made your decision, what comes next? Here are some steps to consider:
Get a Business Appraisal: Find out how much your business is worth. It helps you set a reasonable asking price.
Prepare Your Financials: Make sure your financial records are in order. It makes the sale process smoother.
Find a Buyer: Depending on your choice, look for a buyer. It could be hiring a business broker, advertising, or networking in your industry.
Negotiate the Sale: Once you have a potential buyer, negotiate the terms of the sale, which includes the price, payment terms, and any conditions.
Legal and Financial Details: Work with a lawyer and an accountant to handle the legal and financial aspects of the sale.
Transition Smoothly: Ensure a smooth transition to the new owner. This may involve training, handovers, or ongoing support.
Celebrate Your Success: Finally, take a moment to celebrate your achievements and the new chapter in your life.
Selling your business is a significant decision. It involves thinking about your goals, considering your emotions, evaluating the outside factors, and understanding your options. Once you've made your choice, take the necessary steps to make the transition as smooth as possible. Remember, it's all about achieving your goals and finding the best path for your situation.