5 Key Points to Know When to Sell Your Business
There is no denying that your exit strategy is a tactic that every single business owner needs to have in mind, but sometimes this is more complex than we would like to believe it is. Selling your business can provide you with a lot of excellent opportunities, but unless you completely have an understanding of your exit strategy and the best way to implement it, you will be left with a business that you either can’t sell or that you can’t get its value out of when you do sell.
That’s the reason there are 5 principles that you need to comprehend before you even consider selling your business. These key points are simple enough to understand and helpful enough to give you some valuable insight on whether your business is ready to sell.
1. Is your company salable?
2. Are you prepared to sell your business?
3. Is this the best time to sell?
4. Are you personally committed to selling?
5. Does it help your life plans in the long term to sell your company now?
Those are the 5 principles that you must keep in mind if you are considering selling your business. Because it may be hard to understand how all of these principles work in a real-life scenario, here’s a situation that might enable you to comprehend just how these key points relate to you.
For example, let’s look at Mr. Smith. Mr. Smith’s managed Great way for Selling a business his own handyman business for close too 10 years now. He has built up a fair amount of savings and is thinking about retiring… seeing as how he is around 55. To help add some stability to his savings, he is considering selling his business. However, since he is not sure whether this would be profitable for him, he chooses to use these 5 concepts and look at his business to see if selling is a wise decision.
First, Mr. Smith must ask himself if his business is salable. Well, he has a steady flow of customers that keep him working full-time… plus additional requests for work every week. He employs multiple employees aiding him in his business full time and his records for the past four years show continuous growth and profit. Yes, his company is salable.
Now, is he all set to sell his business? Since he is getting ready to turn 55, he is really ready to retire. He wants a life outside of his business and he determines that this is an excellent time for him to get out.
Next, with the economy in mind, is this an ideal time to sell? Well, it is the middle of the summer and his business is always the strongest during the summer. Also, he just got a motor replaced for one of the business’ trucks, and for the last 5 months he has put money back into the business to upgrade tools and equipment. Also, the handyman economy is booming in his city. So yes, it seems that now is a good time to sell.
Next, is he personally dedicated to selling? Mr. Smith desires to be done working, because he would like to be able to travel and enjoy his retirement free of the stress running a business brings. So yes, he is completely devoted to selling his business.
Finally, does selling accomplish his long-term plans? Selling the business for a reasonable price would help him to realize his dream of investing in the stock market, which he has always wanted to do but never had the chance. This would also allow him to relax on weekday mornings and travel in his camper when he wants. So yes, selling his business helps him accomplish his objective of a successful retirement by age 55.