Selling a company you’ve invested time and effort into can be just as difficult as starting the business itself. While it proves that all that hard work has paid off, it’s not a decision to be made lightly. By considering the state of the business and thinking about what comes next, you’ll be better prepared for the process.
Is It Really the Right Time to Sell?
It’s easy for business owners to become caught up in the minutiae of promotions and sales. Remember, though, that there’s a time and a place for everything. Changing consumer preferences, market conditions, and local competition will determine whether it’s a buyer’s or seller’s market. As when selling a home, it’s important to consider whether it’s the right time to act. Count on the pros at CGK Business Sales for tips, recommendations, and advice.
Is the Buyer Right for the Company?
With time, a business becomes a personal and professional endeavor. Therefore, it’s not surprising that some owners develop emotional attachments. While it’s best to make decisions rationally, owners should consider whether they’re comfortable with a prospective buyer’s approach.
Is There an Exit Plan?
Owners often find themselves focused on growth but building a business can be as much of a hobby as it is a way to make a living. With such a narrow viewpoint, it’s important to develop an exit strategy before putting a company up for sale. An owner may consider:
- Whether they want to assume a leadership role after the sale
- If they’re financially ready for a potential non-compete period
- How they’ll invest the sale’s proceeds
- Whether it’s time for retirement
When someone has spent time growing a business, a sale may leave serious gaps in their routine. That’s why it’s so important for owners to think about how selling may affect their outside lives.
What Are the Company’s Strengths and Weaknesses?
No company is perfect; they all have problems. An honest assessment and a list of areas for improvement will help an owner determine what a business is worth and whether it’s the right time to sell. There’s no one-size-fits-all solution but looking at the business from a potential buyer’s point of view may help. Ask questions such as:
- Does the company have a wide customer base or a select few clients?
- What type of brand recognition or intellectual property does the company have?
When an owner has built a business as a labor of love, they may gloss over its flaws. However, buyers act based on a company’s current condition—not its potential. If there are significant weaknesses, addressing them early on may increase a business’ resale value.
How Much is the Company Worth?
It can be hard for a business owner to come up with a proper valuation, simply because they’ve invested so much effort and time. With so much personal capital invested, it’s almost impossible to separate one’s personal feelings from the company’s true value. To avoid these issues, owners should work with qualified appraisers and brokers whose opinions can be trusted.
Sealing the Deal
While a business sale looks simple on paper, the process can take months. Owners should remember that unforeseen challenges may arise at any time, delaying or derailing a potential sale. Therefore, it’s important that sale documents are prepared properly. When owners work with business brokers, they’re more likely to get the fairest and best deal possible.