When Is It Time To Sell?
There's a rhythm and pattern to life and business. The seasons and cycles of the plant world are generally well recognized. For example, a plant sprouts, grows, flowers or produces fruit, then withers and dies to decay and enrich the soil to support the next cycle.
Businesses also have their cycles, but they need not die to benefit the next generation.
The life cycle of a typical business begins with an idea or concept, followed by the startup or grand opening, continuous fine tuning and adjustment, until things seem to be running smoothly. At this stage, business is good and, albeit financially rewarding, not as exciting as it had been. Nearly all business owners eventually reach that stage where the business begins to interfere with how they wish to live their lives and they begin to think about selling the business.
Many never act on these thoughts with perhaps the biggest reason being "We are what we do," and "our business defines our identity." As a result, less than 25 percent of small businesses and franchises wind up being sold. The statistic gets worse in a down economy, because the owners decided not to sell at the right time.
There's a time to grow. But if you're not focused on growth, it's time to go. There comes a time in every business' cycle when a business owner should decide to sell an entity that will take the business to the next level.
But when the decision to sell is postponed to wait out a bad economy, the window of opportunity will often close, diminishing value.
When that window passes, we generally find the owner just going through the motions and allowing the business to coast or — more accurately — slide. The owner delays or rejects decisions to invest in the business. Eventually, and often very quickly, the slide accelerates with the end game no longer in the owner's control. At the end, the business is either sold to a competitor (at reduced value), or it closes and the assets are liquidated.
Is it time to sell? Ask yourself these 10 questions:
1. Is your business less enjoyable now than it used to be?
2. Does your business challenge and excite you less than it did?
3. Do you think of selling your business more often now than you did previously?
4. Do you find yourself complaining more?
5. Has the business come between you and your loved ones?
6. Has your business begun to level off or decline?
7. Do you feel you no longer have the stamina for your business?
8. Do you wonder what you would do if you sold the business?
9. Do you often wonder what your business is worth?
10. Would you be hesitant to personally guarantee a sizable loan in order to grow your business?
The more questions in which you answered "Yes," the more you should consider whether it's time for a change.
Business pricing methods remain unchanged, even in a down economy. Fewer good companies are on the market as their owners await an improved fiscal climate, while the number of serious buyers in the marketplace increases in a down economy. There's a narrow window of opportunity between growing one's business and a good time to sell it. Sell while you're still having fun.
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Ted Burbank is an author and business consultant based in Millis. Contact him at tedburbank@comcast.net, or visit his website: www.buySellbiz.com.
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