Is It Time to Sell Your Business? Signs to Look For and What’s Next

 Guest     16-02-2023

Image via Unsplash

You’re a proud business owner who’s facing a bit of a conundrum: You love your business but are beginning to think it’s time to sell and move on, for various reasons. Is selling really the way to go? Would staying but changing things up be a better solution instead? If selling is indeed the right decision, how do you execute the sale? When you’re making such a life-altering decision(s), it’s important to take stock and consider everything carefully.

In this mini-guide, we’ll talk about the top signs that tell you it’s time to sell – or change up – your business. We also offer tips and suggestions on what you could do in regards to the sale or continuation of your company:

Are you ready to sell?

People sell their companies for personal or business-related reasons. Do you identify with one of the scenarios given below? If the answer is yes, chances are you’re ready to sell (or change things up):

• •Lack of long-term sustainability: Markets and customers change constantly. Do you believe your business model won’t hold up well in the future without some major restructuring?

• •Business challenges: Sometimes companies encounter complex challenges they don’t have the experience, skill, or technology to handle. In such cases, passing the company on to someone who does makes sense.

• •No enjoyment: Entrepreneurs often start passionate and end up exhausted and fatigued – running your own business can take its toll on you, not to mention the nature of the work changes over time and may increasingly involve responsibilities you don’t enjoy.

• •An offer you can’t refuse: Has another company or investor made an offer for your business that’s very tempting? There’s no reason not to consider it.

• •Life-related reasons: Finally, people often sell because of life-related reasons, even when the company is doing well otherwise. Think retirement, the birth of a child, or a move to a different country.

Ultimately, only you can tell whether it’s time to sell or stay. Try to take the bird’s eye view and consider your finances carefully before deciding.

Keep in mind that selling your company doesn’t necessarily involve a complete departure – you can still stay engaged and involved by owning a partial stake in it. More on this below.

Strategies and tips for continuation or selling

You could continue with your involvement with the company, in cases where you’re too attached or when you see long-term potential. Or you could sell and move on. Below is a summation of the possible options you likely have:

1. Passing it on to someone you know and like

In many cases, entrepreneurs don’t want to sell their beloved company to a complete stranger. Instead, they prefer to pass it on to a friend or family member who they can trust with their legacy and think they can give their company (and employees) the care and attention it deserves.

2. Appointing a CEO or other expert

If you don’t have the time or will to run your company’s day-to-day operations, you could potentially appoint a CEO (or manager or similar). By appointing a CEO, you could free up time for other important tasks like networking. If you’re great at logistics but not so good at marketing and sales, you could find a marketing head to take over the responsibilities, which would leave you free to focus on other tasks.

3. Selling a partial stake in the business

Sometimes, entrepreneurs sell partial stakes in their companies. This could be a minority stake or a majority one (handing over a controlling stake to an investor or firm). This is referred to as a “partial” exit, meaning the owner is still involved with the business but not as much as before. Typically, this is often done to de-risk or for personal financial reasons.

4. Double dipping for extra profit

Double dipping is selling a partial stake in your company to an investor for immediate liquidity (this is unrelated to the unethical practice of double-dipping). You still retain a stake in your company, though. A few years down the road when the company has grown more profitable (and valuable), you (along with the investor, potentially) sell off your remaining stake for an even bigger sum, making a full exit.

5. Complete exit

A complete exit is just like it sounds like – a full departure from the company. You offload the entirety of your stake to an investor or a firm. You’ll need an exit strategy to pull this off – especially if your company is doing poorly. The goal is to limit losses and preserve the state of your business while you leave.

Get organized

Whether you’re selling or restructuring, you’ll need to get organized. The paperwork needs to be clear, and everything needs to be in order for the new owner. You have to think about employee contracts, property rights, and other legalities like taxes. You will need to prep your management team and employees too. Finally, hiring an appraiser, consulting an attorney, and preparing your business to run without you are some things you will need to see to.

Get on top of your finances

The finances will likely be the hardest bit. You may need to prepare a financial overview – both for yourself and for any potential buyer or investor. Having professional-looking, shareable invoices on hand makes you look more credible and improves your financial visibility (and makes it easier for your company to get paid for services rendered otherwise). The best invoice template will include customized text, photos, your logo, and more. You can use online tools to make one and download it in your preferred format. Consult with your tax or financial advisor for this too.

Hire a consultant

Business consultants, brokers, or other experts can help you get your house in order. They can also help you to hunt for leads and come up with a realistic figure for your business (assuming you’re selling entirely). If you’re hiring a consultant, do your research and hire someone with a good record. Selling is always a time-consuming process, and the wrong person may jeopardize the whole thing. There will be contracts to prepare or sign – read the fine print carefully.

You will need to be a salesman

When you’re selling your business, you will have to “sell” it – highlight the desirability and attractiveness, essentially. You have to show your company’s values to secure a good price, just like you do when selling a product or service. That means you also may have to do market research and find appropriate buyers.

Conclusion

Selling, even if you’re feeling sad about it, can be a good thing. It creates time and room in your life for something new and exciting. You could have a brand-new routine, and the latest chapter in your life could be more fulfilling than the previous one. So be positive and maybe see the upcoming change as a blessing as well as a chance to upgrade your life (and lifestyle).