As a business owner, your business is your baby. It might not only be your source of income, but also your identity and your life. The thought of selling your baby is hard to consider especially now and so you wait.
Many business owners will delay the thought of when to sell until it is far too late; leaving them frustrated and felling regret that they didn’t sell when they could have.
Often business owners think that a family member or key employee will take over the business. Sadly we are seeing that many family members do not want the business and the business owners is left considering a plan b.
So, even if you have a family member or key employee that will be buying the business, you still have to decide when you will make the transfer. Often since no formal planning or decision has been made, the decision defaults to when the business owner just does not want to work the business any more. And although this might seem like a logical time, it does guarantee greatest value for the business.
Sadly, waiting until you just can’t do it any more, might actually be at the lowest value of the business. Here’s why. As you start to fall out of love with the business, you are no longer putting everything into the business and the business is no longer operating a peak, the owner is relaxing and the business is as well.
Often sales drop, marketing slows down and the business drops in profit and revenues, hence dropping in value.
So instead of waiting until you can’t do it anymore, plan to exit when the business is at its peak.
For business owners this is a VERY hard time to sell. Image as a business owner you have built your business to almost run itself and the economy takes off and suddenly you are making more money than you have ever made and your business is running at its best.
It is easy to think the curve will continue to go up, but this never happens. As the saying goes, what goes up, must come down. Eventually the business will decline.
Because the value of the business is highly weighed on its revenues and profit, now is the ideal time to sell, but emotionally the hardest time to sell.
When talking to friends and family about selling, they will think you are crazy. Your spouse might question your sanity and you probably still love your business.
If you understand the growth curve of a business you know that after ever good period is a down period and either you can be the one working through the down period or the new owner can.
Sadly many business owners get comfortable and when a growth spurt like this occurs, they hold on and think it will last forever. Then they kick themselves years later when they had an offer to sell (near the peak) and they turned it down.
When you get an offer and the business is growing, now is the time to consult with a business broker or business intermediary. Get the business valued and ask for the market trends to see if there are indications of being towards the top of the peak.
Taking some time prepare yourself now, could save your thousands and maybe even millions in the future.