Should I Sell My Business?
by Steve Wright Ph.D with Transworld Business Advisors
Should I sell my business? A great question isn’t it?
Should I sell my business is a great question that only a seasoned business owner can fully understand. Every business has a story, a beginning, middle and an ending. Honest business owners will tell you that these stories are full of tribulation, sweat equity, pain, victory, triumph and plenty of highs and lows.
Exactly how does a business owner find a buyer and what are the steps that the buyer has to walk through? Buying a business is not an easy journey and it requires great attention to detail.
Should I sell my business is really so much more than a simple question as any business owner will tell you. Businesses often begin with a dream, they are forged by fire and the owner’s personal investment can never adequately be valued or articulated.
Should I sell my business might better be seen in the light of, “should I sell my hand, my leg or my heart.” The business to many business owners is part of who they are, their thoughts, their time, their dreams, their hopes and dreams. These “businesses” have put food on the table, paid the bills, paid college tuitions, paid for vacations and most of all memories. You can now see, hopefully, that the decision, should I sell my business, is not a decision that is easily made.
Reasons Why Business Owners Decide To Sell Their Businesses
There are many valid reasons why business owners decide to sell their businesses. Retirement, health, burnout, industry changes, economics, employee issues, competition, and new opportunities are just a few reasons that owners decide to sell.
We meet with 3-5 business owners a day and we always ask the question, “Why have you decided to sell your business?” Without exception, the business owners we meet with share the most contemplative responses that you could ever imagine. Their decisions are never off the cuff or ill-advised.
At some point, every wise business owner will consider his or her exit strategy. In fact, most business owners will confess that they often ask the question, “Should I sell my business and when is the right time?” It isn’t a matter of if; it’s a matter of when.
When It’s Hot, It’s Hot
Raleigh NC, where my wife and I live in a very hot market. The market is so hot currently that we have more qualified business buyers than we have quality businesses to sell them. The Raleigh business selling market is really hot right now but this will not always be the case.
Almost daily we receive phone calls from local business owners inquiring about our services. Here are a few of the questions that we frequently are asked, “Can you help us sell our business?, “ How much do you think our business is worth,” and “How long will it take for our business to sale?”
Is your business a hot business? There are a few factors that weigh into this question. “How long have you owned your business?, Is your business profitable?, What is your SDE?, Do you have good books to substantiate your financials?, How much time is left on your lease?, Are you willing to stay for a period of time to train the new owner after the sell?, How old is your equipment and inventory?”
If you show us business with growing profits over the last three years, a business with good books and a business that meets the aforementioned criteria mentioned we will show you a hot business that will sell easily. Business buyers love to buy businesses that have great goodwill, credible books, loyal customers and businesses that have employees that will stay with the company.
If you are asking the question, “Should I sell my business?,” you may want to first ask, “Is my business saleable?” In real estate, you hear the old adage of selling, “location, location, location.” It takes a bit more than location to make a business listing hot.
The reason these factors are so important is that MANY business owners attempt to sell their business too late. Businesses are nearly impossible to sell when owner benefits are on a downward trajectory, employees are restless, margins are low and net revenue is down. Owners in this situation often call us wanting to talk about “potential.” Very few investors want to buy potential and banks do not loan money on potential.
What’s the bottom line here? Sell your business when it is growing and you will earn more money for your business. Think of your business as your greatest investment. Like other investments, you always want to sell them when the markets and other indicators are up. It is truly a sad day when a business owner comes to us with a business that is hemorrhaging and the prospects of turning it around seem next to impossible.
When Should I Sell My Business?
Seller motivation is the biggest single determinate of when is the best time to sell my business. If a business owner can’t envision life on the other side of running their business then they may not be ready to sell their business. We always encourage business owners to consider selling their business when the decision I still their decision to make.
What will you do after you sell your business: retire, start a different business, travel, move to a different location? What does life look like after the sale of your business?
Contact A Professional
Did you know that a business sold through a business broker typically nets the business owner approximately 30% more profit at closing? You are a professional as a business owner and you wouldn’t have been in business as long as you have been if you were not great at what you do. There are a number of reasons that a business advisor adds value to your business sale and you would not be prudent if you did not sit down with a professional advisor during such a crucial time of decision-making.
Remember that during the life cycle of your business that you have worked tirelessly and the investment that you have made is beyond measure. At this most critical time, you do NOT want to shortchange yourself while attempting to save a few dollars. In the end, you will make so much more using a professional business broker.
Remember that your business is valued up to the moment of the closing. Business owners can’t put a sign up in their business that reads, “BUSINESS FOR SALE.” A business sell must be kept confidential so that customers, employees, competitors and vendors do not know for obvious reasons. The process of selling a business is tiring, difficult, timely and it is often painstaking as attorneys, accountants and landlords are involved. It’s better to leave this work to the professionals.
Business Valuation - When Selling Your Business
Most often, a business owner is the worse person to attempt to place a fair value on their business. Business advisors have access to scores of tools that allow them to compare your specific business to hundreds that have actually sold. The goal isn’t to list your business, the goal is to sell your business.
What does it profit you to have your business on the market for two years at some ridiculously overpriced amount? Sure you may be able to brag to a few uninformed family members but no one in their right mind will be impressed. Imagine placing your house on the market tomorrow morning $500,000.00 over the market value for your neighborhood. What would happen? Nothing and the same is true for over-priced businesses.
In our market, there are a lot of businesses for sale in Raleigh, NC. The ones that are priced right sell quickly and the ones over-priced just sit and sit. Your business advisor will help you place a proper selling price on your business.
Should I Sell My Business?
The answer to this question is really up to each and every business owner. Here are a few takeaways.
Sell when your business is growing.
Keep and present good books.
Keep the sell of your business confidential.
Price your business at the right price.
Consult a professional business broker.
View our current business listings.