In this article, Transworld Business Advisors will share some of the typical reasons for selling a business to help you identify if the time for you to sell is now.
Our Denver business brokers have worked with hundreds of business owners to help them exit their business. Year over year we’ve seen a steady 10% growth in business owners selling to retire, but there are any number of reasons to exit a business which we’ll dive into below.
Low Motivation and Burnout
As a business owner, you’ve got to be “on” all the time. There is no lack of tasks to take care of, employees to manage, strategies to develop, and, of course, issues big and small pop up all the time. In the beginning, you might thrive on this full schedule, but there comes a time in many business owners lives when this becomes a drag. You lose your motivation and are honestly burnt out. If you’re feeling the burnout, than now is a great time to sell. Cashing out from your business will give you the opportunity to find your passion again and find a new venture or career path to follow.
Net Worth & Liquidity
Speaking of cashing out - if all of your value is tied up in your business, there may come a time when you need to cash out. Maybe you have a new business idea you would like to pursue but, you need capital to get started. This is a great opportunity to cash out of your business and invest your capital into something new.
Your Business Has Peaked
We have addressed this subject before in a prior blog post, but it’s worthwhile mentioning again. When your business is doing really, that is an ideal time to consider selling for a few reasons. At its peak, your business will have a high valuation which means a great return on investment for you. With its strong financials, buyers will also be able to receive financing more easily. The success of your business will also give buyers forward momentum to work with.
If you’ve been a business owner for a long time, and have been able to grow your business in scale to a certain level that’s great! But it can also mean that the bigger your business gets the larger and more expensive investments back into your business become, and this can be difficult if you have limited cash reserves. But this is a great opportunity for a new entrepreneur to come in and push the business to the next level, while also being able to give you a great return. Selling a business for this reason could also be an opportunity to seek recapitalization, where you sell partial ownership of your company.
While this can be a sad reason to sell your business, the reality is tragic circumstances do come up in life and they can often necessitate change. Life events like a death in the family or getting a divorce can make it really difficult to continue to run your business at peak level. If you find yourself in this type of situation, a business broker can be a great advocate to manage the process and help you exit your business for the best possible return. Transworld has worked with business owners under duress, and find that having an advisor to provide expert advice makes the sale go much more smoothly than if you were to sell on your own.
Is There a Wrong Time to Sell a Business?
While there is not necessarily a wrong time to sell a business, there are definite factors that make certain times better than others. There are always going to be buyers in the market for businesses, but the market, the business’s industry, and it’s financial performance will all affect the selling price you can receive.
If you’re thinking about selling your business for any reason, we invite you to speak with a business broker to help understand the circumstances unique to your situation and build a strategic exit plan that is right for you and your business. Schedule a free consultation or visit our website for more information.
Rachael Holstein has been the Marketing Manager for Transworld - Rocky Mountain since 2016. Her work experience has been largely focused on business development and marketing in business brokerage, finance, architecture, property management, and information technology. A long time resident of Cleveland, Ohio, she attained her undergrad from John Carroll University and her Master’s Degree from Cleveland State University. In 2013, she relocated to Denver with her husband, Joe, and her furry companions to explore the mile high lifestyle!