When Should You Decide To Sell Your Business?
If you don't know when to sell your business, you might miss the best chance to get the most money for it. Small business owners struggle with timing their exit, sometimes waiting too long or selling too early.
Deciding when to sell your business is important and you should consider it now, even if you never plan to sell. Keeping the option to sell open gives you more freedom and flexibility.
In this newsletter, I’ll explain how to pick the best time to sell your business, why it's important to always be ready, and the mistakes to avoid.
Deciding When to Sell Your Business
Deciding when to sell your business involves several important steps to ensure a big exit as a small business owner. Here are 4 steps to help you decide when to sell your business for maximum value:
Check Your Business Health
Assess Your Personal Readiness
Understand Market Conditions
Get Professional Advice
Step 1: Check Your Business Health
Before deciding to sell, check your business's health. Review your financial statements for profitability and stability. Look at key metrics like revenue trends, customer satisfaction, and operational efficiency. Ensure your business has strong processes and a capable team. A well-documented business is more attractive to buyers and shows it runs smoothly without you.
Practical Tip: When you decide that selling could be an option, get started by creating detailed reports of your business's performance. Identify strengths and fix weaknesses to make your business more appealing by the time an exit appears on your horizon.
Step 2: Assess Your Personal Readiness
Your readiness is as important as your business's health. Think about your goals and reasons for selling. Are you looking for a new challenge, or do you want to retire? Consider the emotional impact of leaving your business and ensure you're mentally prepared. Being ready to sell can greatly affect the success of your exit.
Personal Story: When I sold my first business, I wasn't mentally prepared, which made the transition hard. Learning from that, I now stress the importance of personal readiness to my clients.
Statistics: It's reported that roughly 75% of owners regret selling their business within a year, mostly because they weren’t personally ready. Make sure you assess your readiness thoroughly, by answering these 3 must-ask questions to avoid regret.
Step 3: Understand Market Conditions
Market conditions are crucial in deciding the right time to sell. Research industry trends and economic factors that could affect your business's value. Selling during a market peak can maximize your returns, while a downturn might not be ideal. Stay informed and be ready to adapt.
Expert Advice: Consult industry reports and economic forecasts to find the best time to sell. Watch competitor activities and market changes that could impact your decision.
Step 4: Get Professional Advice
Professional advice can provide insights on the value and sellability of your business, so you can make informed decisions. Business brokers, M&A consultants and Sellability Training Programs can support you to prepare and sell your business for maximum value.
Case Study: Marie, a small business owner, got a personal assessment of the value and sellability of her business done, which led her to make changes that increased the value of her agency from almost zero to over a million dollars. Professional advice gives you the strategies needed to sell your business for maximum value. Read the full case study here.
Visual Element: Create a timeline for your exit plan. Include key milestones like getting a baseline valuation done, assessing the key value drivers and reducers of your business, and making the changes which multiply the value of your business. This visual aid can help you stay organized and focused.
Success Story: From Hesitant to Confident Seller
Take the story of Mark, a small business owner who followed these steps and successfully sold his marketing firm. Initially hesitant to sell, Mark understood his business was in great health and thriving, so the time was right to make himself friends with the idea of selling his business.
Surrounding himself with owners who had sold their businesses, getting familiar with the nuts and bolts of selling a business, and building an exit team around him which he trusted, let him seize an opportunity in the market when he spotted it.
It all helped him to sell at a peak time, resulting in financial freedom and the ability to move on to new ventures and create his next masterpiece.
Interactive Element: Your Exit Plan Challenge
Over the next months, take these steps to evaluate your readiness to sell your business:
Create a detailed report of your business’s health.
Reflect on your personal goals and readiness.
Research current market conditions.
Educate yourself on the value and sellability of your business and the ins and outs of the sales process.
Additionally, create a vision board or timeline for your exit plan. This visual representation can help you stay focused and motivated.
Share your progress and insights with me! Remember, planning your exit is a journey that can lead to your next level of freedom.
Dive deeper and discover how to time your million-dollar exit.
