It’s the rare business owner who doesn’t dream of cashing in on all the hard work they’ve put into their business. 
But most people leave it too late to think about when is the best time to sell their business. If you get to the point that you have to sell, this usually means you have reached the point where it becomes the most difficult time to maximise the business’ value. As with most things in life, it pays to have a plan. It’s wise to recognise the reasons that may cause you to sell your business and to plan an exit strategy while the business is in good health and enthusiasm is high.
Planning for Retirement
Planning your retirement is a good reason for selling your business. Putting early plans in place will ensure you are well prepared financially so you minimise the tax impact and can continue to live the lifestyle you want. If it’s a family business, you may prefer to implement a succession plan.
Selling due to Illness
Having to sell your business because of illness – yours or someone in your family – is one of the hardest reasons for selling and clearly you will have little or no control over the timing.
Cash Flow Issues
A lack of and a need for capital are reasons why a business owner may be forced to sell. Not having the resources and cash flow to expand and grow your business can be tough. In times like these bringing in a partner can be helpful.
Conflict with a Partner
Being in dispute with a partner is a nightmare for both of you, and the business will suffer quickly through a lack of focus on its day to day operations. If the differences are irreconcilable, then get on with life and look at your exit strategies.
It’s Just Time to Move On
Being self-employed and owning a business can be demanding and you may find yourself working more hours than ever before. The dream of the better lifestyle may evaporate as you put 16 hours a day into your business. Personal time with family and friends can become almost non-existent and you wonder if it is all worth it. It this sounds like your life – you are heading for burnout and have probably had enough of the daily grind. Take a break – find someone to run the business while you have a short break or shut up shop. A couple of days can make a big difference, and if you still feel the same when you get back, it may be time to sell your business.
Failing in Business
There comes a time when you have to face the facts, and be brutally honest with yourself. Nobody starts out to fail but if your expectations are not turning into reality and your business is losing, and you can’t dig your way out of it then you may have very few options and selling may be one of them. This is not the most ideal time but sometimes you have to cut your losses.
Prepare for the Future
Before making the final decision to sell your business, take time out to think about why you are selling and prepare yourself well in advance for the sale process. This will allow you to lay the groundwork for a successful and profitable sale. In our next article, we’ll look at the tasks you need to complete to prepare your business for sale and how to take care of the legal paperwork.
