It’s natural to become attached to a business, especially if you have built it from the ground up and even if it is not doing well. Experts advise, however, that business owners should have an exit strategy in place as early as possible.
Here are a few reasons that it might be time to start preparing to sell your business and what to consider:
Has the business environment shifted?
Selling your business makes a great exit strategy when looming changes are likely to affect the operations of the company negatively. For example, the IT industry is faced by rapid changes that outdate businesses within short periods.
Business owners should foresee such changes and plan an exit strategy that takes this into consideration.
Retailers and B2C companies are the most affected by the current technological trajectory – apps, online retailing and other trends threaten their existence. The introduction of Uber almost phased out the taxi business while in-person speed-dating services have become extinct with the invention of dating apps.
Sadly, even if your company wanted to adapt their operations to the current trend, you would have to make these changes rapidly in order to try and catch up with the competition. Therefore, a team dedicated to the marketing and PR can make or break your business and its potential future should they not be able to foresee such trends early enough.
Is there a good opportunity?
Exit strategies are not just caused by bad experiences but also good ones.
You might want to sell your company if a lucrative opportunity is presented. Buyouts add liquidity to a business especially if you are managing different branches.
Experts say that running an independent business is a risky venture and the longer you hold on to it, the higher the chance of failure. While the business has a substantial value, you can only realise it when you sell part of or the entire venture.
For example, a young social-media website may get an offer from Facebook, Twitter or another established company.
Are you sick or ready for retirement?
Running a company is difficult enough to do when you are operating at full capacity so, if you become ill, selling your business might be a way to relieve yourself of a lot of stress.
Similarly, if you no longer enjoy running your firm, selling it makes sense.
Approaching retirement, you should also consider selling your business and try to cash in on your many years of hard work!
Selling is a process
No matter what reason you have for selling, before you do you will need to make sure everything is in order. This process can take a while. A potential buyer will want to look back on at least three years of company books that are in order, and so it’s often advisable that you’ve been keeping books with a sale in mind in that time.
If the company has been incorporated, you should decide if it will be sold as a share sale or an asset sale. Businesses that have been performing poorly prefer making a share sale where the owner sells everything, including the incorporated company.
You also need to make yourself dispensable; nobody wants to buy a business whose value depletes when the owner leaves. Potential buyers want a business that runs well without specific input. You should ensure the company has a strong team, effective business procedures, efficient communication and successful marketing strategies that will accommodate the new owner.
Expert help also comes in handy when preparing to sell the company. A professional valuation expert can help you to determine the net worth of the business while a business broker finds potential buyers and navigates the sale process on your behalf. CMC Business Advisors has the experience of both these aspects plus more. Your local CMC Partner will give you a valuation, help you and your business increase the business worth with a planned exit strategy and prepare your business for sale when the time is right for you. Over the last 25 years CMC has been involved in many successful business sales, reaching a total value of over £156 million to date. Read more about CMC Business Advisors here
No matter what the motivation for selling, if you have everything in order there is no reason why your sale can’t get you a price that you’re happy with so that you can move comfortably into the next phase of your life.
By Anthea Taylor, Assistant Editor at Dynamis and writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.