Should I Sell My Business? 14 Signs That Say Yes
As an entrepreneur, you've poured your heart and soul into building your business. But there comes a time when every business owner must ask themselves - should I sell my business or keep it? The decision is challenging, and it involves weighing various factors.
In this article, we'll explore 14 signs indicating it's time to consider selling your business and answer a few other commonly asked questions.
Disclaimer: The information contained in this blog is provided for informational purposes only and should not be considered as financial, tax, legal, or accounting advice.
We are not certified tax professionals, and tax complexities can vary greatly by individual circumstance and jurisdiction. Always consult a qualified tax advisor or legal professional for personalized advice to ensure compliance with your local laws and regulations.
When is the Ideal Time to Sell My Business?
The ideal time to sell your business hinges on several factors:
The business's financial performance
Market conditions
Industry trends
Your personal goals
A peak in profitability, a stable or growing revenue stream, and strong market demand for businesses like yours could be good opportunities to finalize the sale decision.
For example, suppose you own a tech startup with strong yearly revenue growth and profitability, and the industry trends show increasing investments in tech. In such cases, it might be the perfect time to consider selling and maximizing your returns.
You must decide and prepare for the sale well in advance—ideally a year or two in advance. Focus on improving financial records, business structure, and customer base.
TL;DR - Should I Sell My Business or Keep It?
Consider selling your business if most of the following signs resonate with you.
Need for Resources or Expertise
Attractive Acquisition Offers
Business Valuation Peaks
Capital for New Ventures
Partnership Disputes
Succession Planning
Industry Changes
Personal Reasons
Financial Distress
Lifestyle Change
Risk Reduction
Market Timing
Retirement
Burnout
Is it the right time to sell your business? You can make that call as the business owner. But remember that the decision isn't binary. You need to consider several factors before you decide to pull the plug.
If you’re unsure what’s best for your company, Exitwise is here to help. We’ll introduce you to top M&A experts in your industry who will advise you during the M&A process until you sign the final sale deed. Reach out to us today to discuss your unique situation.
14 Reasons to Consider Selling Your Business
Here are some reasons that may push you to sell your business.
1. Need for Resources or Expertise
Selling lets you tap into new resources or partner with experts who can elevate your venture. These partners can open new doors, including access to cutting-edge technology, industry connections, or gaining specialized knowledge.
2. Attractive Acquisition Offers
Sometimes, selling your business may not be your immediate goal. However, if you receive enticing offers, selling might align with your long-term goals.
For example, a larger company may see the value in your business and want to integrate it into its operations. Such an offer is hard to pass, especially if the terms and conditions meet your demands. That's where you may want to start learning the intricacies of selling your company or seek the help of seasoned M&A experts.
3. Business Valuation Peaks
Your business valuation is based on various factors, like your current and future financial projections, market trends, and more. Use our innovative business valuation calculator to get an idea of your target value.
Once the valuation reaches its peak, you can capitalize on it by strategically selling at the right time.
4. Capital for New Ventures
Selling your business can provide the necessary funds for your next entrepreneurial endeavor. Whether you are eyeing a new startup or expanding an existing venture, liquidating your current company is a great idea to gather capital and add a star to your entrepreneurship experience.
5. Partnership Disputes
Businesses running on partnerships sometimes face disagreements, which can hinder growth. In such cases, selling your business could be a good escape route. However, unless it's incredibly urgent, you can wait some time to improve your business's valuation and then sell it to an interested party.
6. Succession Planning
In some cases, a business owner may not have any successors in their family to run their business. That’s why succession ownership planning is essential to ensure that you hand over your business to someone with a similar vision for maintaining consistency in quality and customer trust.
Whenever you come across such a person or organization, selling your business can help keep your company's legacy alive for a long time.
7. Industry Changes
Rapid shifts in your industry may prompt reevaluation and a decision to sell. If your business model becomes outdated or faces disruptive competition, selling your business allows you to minimize losses and entertain new ventures to adapt to the changing market.
8. Personal Reasons
Life events or family issues may also lead to selling a business. These include unexpected health problems, the need to care for family members, or a desire to retire and enjoy a quieter life.
Personal goals or aspirations sometimes change, prompting business owners to pivot towards new adventures or passions that align better with their evolving interests.
9. Financial Distress
If your business is drowning in debt or facing challenges, selling becomes an inevitable but effective survival strategy.
Selling your business can alleviate financial strain and provide relief in times of economic distress.
10. Lifestyle Change
As priorities and life choices evolve, selling your business can allow you to fulfill your needs. You may want more time for travel, hobbies, or spending time with your family. For such life-changing goals, selling frees you from the daily grind.
11. Risk Reduction
Sometimes, minimizing risk means letting go of your business. If external or internal factors threaten the stability of your business, selling becomes a smart move to save your investment and remain viable for future endeavors.
12. Market Timing
Factors like inflation, recession, geo-political situations, etc., greatly affect the business market. Favorable market conditions yield better returns when selling a business.
You should wait for the right moment to get the best valuation for a positive financial outcome.
13. Retirement
After dedicating valuable years of your life to your business venture, you may feel ready to retire and enjoy the fruits of your labor. Selling your business can pull off the weight of professional responsibilities from your shoulders and also fund your retirement.
14. Burnout
Exhaustion from running your business signals it's time to explore other paths. If managing your company has taken a toll on your well-being, selling allows you to recharge and explore new adventures.
Who Can Help Me Sell My Business?
Expert guidance regarding mergers and acquisitions can prove invaluable if you're contemplating selling your business.
We at Exitwise, a trusted partner in business transitions, can assist you with the sale of your business. We help you find seasoned professionals to guide you with your deal for the best business valuation. Whether you need experts to understand market dynamics, valuation strategies, or negotiation tactics, we have you covered.
See our customer success stories to learn more about why you should choose Exitwise while selling your business.
How Much Can I Sell My Business For?
Determining the right price for your business is crucial, and our valuation calculator can help you get an overall estimate of your business. You can also opt for a detailed expert valuation. In this report, you'll get an estimate of your business's potential value after inputting relevant data—such as financials, industry trends, and growth projections.
Always remember - an accurate valuation is essential to get the best value for your company.
Frequently Asked Questions (FAQs)
Here are your answers to some commonly asked questions about selling your business.
Should I Sell My Business When It's Doing Great?
Timing is crucial in selling your business and getting the most value out of it. If you've achieved consistent profits and have a solid customer base, selling during this peak could yield substantial returns. However, while it's tempting to sell when things are going exceptionally well, you should also consider factors like your long-term goals and scope for better valuation in the future, among others.
Can You Sell a Business With a Pending Lawsuit?
Yes, you can. However, transparency is crucial in such a situation. Disclose your business's legal situation to potential buyers. Some buyers may be willing to proceed, while others may shy away. You should consult legal M&A experts to navigate this complex scenario.
Can You Sell a Business That is Not Profitable?
Selling an unprofitable business is challenging but not impossible. To attract buyers, focus on your business's other valuable offerings, such as a solid customer base, long-term contracts, growth potential, etc. Be transparent about your financial challenges and emphasize the turnaround potential to convince prospects about the possibilities of success.
How Long Does it Take to Sell a Business?
The sale process involves negotiations, discussions, and due diligence, which can take anywhere from eight weeks to over a year, depending upon the complexity. However, the timeline for selling a business varies depending on various factors. It’s best to start preparing early—ideally a year or two ahead—to improve financial records, business structure, and customer base.
If I Sell My Business, How Much Tax Will I Pay?
Tax implications depend on your business structure, location, and profit. You should consult a tax professional to understand capital gains tax, income tax, and other applicable taxes. If you plan well, you can minimize your tax impact after selling the business.
Conclusion - When Should I Sell My Business?
The decision to sell depends upon various factors, such as personal life, future plans, risk mitigation, retirement, fresh starts, etc. As an entrepreneur, you hold the compass to your business's future and must consider the reasons, timing, valuation, and circumstances.
If you do decide to sell your business, consider teaming up with us at Exitwise. We will help you create your dream team of M&A experts who fetch you the exit you deserve.
