Knowing when to sell your business requires strategy, careful considerations, and reasonable expectations. If done haphazardly, you could lose thousands upon thousands of dollars. Yet, if done cautiously and tactically, you could make even more than you might have originally thought. Are you wondering if now is the time to sell your business? Wonder no more. If you evaluate the following four factors, then you will know if now is the most advantageous time to sell your company.
Time It Right
You never want to sell your business if you have some big moves in the works. If you just landed a big contract or updated your equipment, you should wait. These situations have the potential to greatly increase your net worth, and you don’t want to undervalue your company before knowing their true potential. Then, once you have data showing how these changes improved your cashflow, you can sell your business for even more.
Take Advantage of Your Success
If you are having a record couple of years, it may be tempting to just keep holding onto your business to see how high you can get its value. However, this usually ends up being a mistake. When your business is thriving, take advantage of it and sell. Potential buyers want to see a strong trajectory and solid hope for the future. If you wait, that is not a guarantee. If you lose a big customer or the economy takes a nosedive, you will have to wait many more years for your company to recover before you can take it to market.
Pay Attention to Trends
Every industry has trends: things that are extremely popular and dominate the entire market. Depending on your product/service, these trends can either benefit you or hurt you. Either way, you should consider selling. If the trend is going to boost your business, then the demand for it will be high. You will likely get calls from people who are willing to pay you much more than the company is currently worth because they see the potential behind the trend. On the contrary, if you see a trend coming that could negatively impact your business (like how the rise of Netflix could hurt you if you were the owner of Blockbuster), sell quickly. Don’t let that trend knock you down before you find a buyer.
Be Reasonable
Yes, your business is your baby, and in your mind it is priceless. However, to the rest of the world, it is just another business. Always keep your emotions out of the decision and focus on the logic. If you get an offer for your company that is close to your current valuation, don’t hesitate to say yes. If you hold out for something higher, it may never come. Choose a valuation that you would be happy with, and if that offer comes, take it without a second thought.
Knowing when to sell a business is a bit of a science. A thorough valuation is the first step, and then, it all comes down to selling at the most opportune time for your industry and business. This is not the time to get greedy and hold out for something more—it is the time to be fair, think clearly, and get ready to move on to your next opportunity.
