How to Know When You Should Sell Your Business?
Businesses sell every day all around the world, and for different reasons. It generally comes down to the owner and their reasons for selling. One challenge that most businesses looking to sell have in common is knowing when the right time is to put their business on the market. If you’re in the same boat, then hopefully our guide will help you determine when the right time will be to put your business on the market so you can get the best return on your investment.
Why do people sell their businesses?
Business owners are influenced by a number of factors when they decide to sell, whether they be personal, strategic, or financial, or a combination of the lot. One of the primary benefits of selling a business is the income that comes from it.
Some business owners see potential competitors rising or another threat to the market and sell as a means of avoiding it. In contrast, others sell because their business is flourishing and is poised to receive a good valuation. Retirement is also another reason why many business owners choose to sell. Normally, this is when they don’t have a legacy exit plan that involves a son or daughter taking over the business from them. Again, there could be a combination of reasons why business owners sell; whatever it is, you must understand why you’re selling before you do.
The pros and cons of selling
Selling a business doesn’t always indicate something negative; in some cases, the reason for selling is actually a smart strategic move for the owner. With that in mind, here are some pros and cons of selling a business:
Pros:
- A direct benefit of selling a business is, of course, the financial benefit. When you sell your business, it would be valued and sold for a specific amount of money. If the business were≠ healthy and appealing to buyers, the potential sales price would be higher. By converting business equity into cash, you can either reinvest in another venture or retire
- Selling your business reduces your risk. With your business sold, your financial, legal, and personal liabilities are significantly reduced, relieving you from the daily pressure of owning and operating a business
- With your extra time and money, you have the freedom to explore new ventures
- In some cases, you may be unable to continually grow your business. Selling to the right buyer can ensure that your business keeps moving on an upward trajectory
Cons:
- One of the drawbacks that we often see business owners struggle with is a lack of control. Think about it, you spend years in control of an entire business to step out into something smaller or nothing at all. This can be challenging, which is why most exit plans should involve a phase for when you leave
- Sometimes, the loss of income can also have a negative impact on business owners. Before the sale, owners could rely on a consistent income stream. Now, they either have to reinvest or work with the money they have
- Unfortunately, selling a business also means you may get hit by goods and services tax, income tax, and capital gains tax. Some of these taxes and concessions, make sure to check them out before you sell
- The sale of a business is often linked to the conditions of the current market. If the economy is struggling, then selling a business might not be ideal, as it could sit on the market for a while, or you might get a lower price for it
Get help selling your business
Maybe you’re still struggling with finding the right time to sell your business, or you need help marketing it, you need to contact a business broker. Consider Benchmark Business Brokers in Melbourne to help you sell your business. Benchmark brokers have been in the game for a while and know how to read the market and present a business appealing to potential investors.
Final thoughts
When it comes to selling your business, some people might say there’s never a right time; you just have to go for it. We’d beg to differ. The ideal time to sell your business would be when the market conditions align with your personal goals, the business is performing well enough to attract investors, and there is active interest in your company or industry. If you can check these boxes, it may be time to sell your business.
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Elijah Senolos
