When you choose to sell your business will be one of the most important factors that relate to how much you will be able to get for it. There are some key timing factors that will determine your business’s chances of selling, as well as the eventual price you will get for it. Riding the wave to your company’s peak, then cashing out before your enthusiasm starts to wane, while taking advantage of good market conditions will be an entrepreneur’s best case scenario.
Peak Performance
Ideally, you want to sell your business when it’s at its absolute peak. It seems like the exact opposite of what you will want to do when your business is doing well, but selling at this time will ensure that you get the most money possible for your business. If you are making fantastic money and the business is running like a well-oiled machine, selling should be something that you should really consider, because there is no better time to exit. If you have a trained staff and maybe even a strong management structure in place, and the daily operation doesn’t depend on you, then your business is really operating at its highest level. Selling when the company is thriving and has a solid 3-5 year track record of financial success will ensure that you get top-dollar for your business.
Too many business owners wait too long until sales are on the decline, and doing so will effect the market value of your business and ultimately the salability of it too. Buyers want to purchase a healthy business with a proven track record of success. Not too many buyers out there are looking to spend good money on a business that is declining in sales year after year. Think about it…would you buy a business that was on a downward trend? Probably not. This situation is a huge red flag and might prevent any buyers from even being interested in learning more about your company.
Enthusiasm for the Business
Sales is purely a transfer of enthusiasm, and a seller’s passion or lack thereof for their business will be fairly obvious to a buyer. Time and time again we have sellers approach us to sell their business when they are tired, burnt out, or beyond ready to retire. They have taken their foot off the gas, and the business has started its way into a slow decline, both operationally and financially. The ideal time for a business owner to sell their business is before this even starts to happen.
A key to selling your business is to make it as desirable to a buyer as possible. Part of that desirability is the story that the seller tells and their transfer of enthusiasm and passion for their business. If a buyer feels the seller’s love for their business, and sees the potential in it, then your chances of selling are much greater. Also, a business that the buyer is excited to purchase will have a higher perceived value. If you wait to sell until you are sick of your business and you just can’t wait to get rid of it, a buyer will sense that too. So, the best case scenario is to sell before you get to that point.
Selling Conditions are Optimal
Another great time to sell your business is when the market conditions are favorable for sellers or we are in a ‘sellers market.’ This is something you can talk to your business broker about or do some research on. The optimal conditions for business sellers is when there is lots of buyer activity, a lack of inventory of quality businesses on the market, or we are going through a big population boom or your industry is experiencing a period of growth.
Right now, we are experiencing the epitome of optimal conditions. Our business sales market is flooded with qualified buyers looking to purchase great business opportunities. The demand for businesses to buy is bigger now than we’ve ever seen it. A good business listing is hard to find right now. Most of the quality opportunities that are priced according to market value are getting snapped up much more quickly than in years past. As cliche as it sounds, now is really the perfect time to list your business for sale.
Furthermore, tax rates haven’t changed yet, so it’s an even better time to sell now than waiting until the tax situation changes, as it’s expected to do so in the near future. Of course, you will need to consult your CPA regarding the tax implications of selling your business.
If you have questions about whether or not now is the right time to sell your business, we are here and happy to help. Every business is different, and we will be able to give you our expert opinion, even if the answer is that we think you should wait. We will be here whenever you and your business are ready.