There comes a point in every business-owner’s life when you begin to contemplate the idea of selling your business. You’ve invested years of your life into building the company, but you start to feel like it would be better to sell the business and move on to other opportunities.
If you’ve grown your company to the point that you can consider this, congratulations! You are among the very hard-working and very fortunate who have achieved such an astounding level of success. It takes a lot to bring a business this far along, and you deserve all the rewards you will reap when you sell the company.
But don’t leap into anything just yet! You’ve invested so much time and effort into growing the company, so you want to be sure you’re selling it off at the right time and to the right people. That means taking a few factors into account first:
Value protection — The last thing you want is for the business you’ve worked so hard to build to be ruined by someone who doesn’t know how to run the company. You need to ensure that the value of your company and brand is protected. That may mean establishing a board of executives to keep everything moving along smoothly, and keeping the company’s and shareholders’ best interests at heart.
Leadership — This goes hand in hand with the previous factor. If you were the driving force behind your company’s success, what will happen when you are no longer there? Will the company continue to succeed because they have a strong core of leadership to keep them going? If not, you need to put one in place to ensure the continued growth of your company. That may mean establishing a board of directors, or it may mean finding a new business owner or executive officer who shares your idea for the company, and who is equally invested in its success.
Potential growth — Your company will only be worth purchasing if investors see potential for growth. That means you have to ensure that your company is in a position to grow and take over more of the market share, or branch out into a lucrative new market. That potential for growth is what will increase your company’s chance of selling.
If you have all three of these factors, it’s time to consider selling the business. If you can be sure your company is in the right hands, hands that will continue the growth and protect your brand values, you can consider selling.
But those aren’t the only factors to consider! You, as the owner, also have to ask yourself:
Am I ready to sell? — Do you have a compelling reason to sell the business? Perhaps you have health concerns that are causing you to rethink the amount of time you spend at work, or you have other personal problems. Or the problems could be of a professional nature, such as a desire to move on to other things or irreconcilable differences between you and your co-owner.
You may be presented with a new investment opportunity, but it requires liquidity that would only be possible after you sell your shares in your current company. Perhaps the business isn’t returning on your investment as much as you had intended.
Whatever the case, you have to be 100% certain you’re ready to sell. If you know that selling is the right thing for you, it’s a good option to consider.
Is there a strategic reason for the sale? — Perhaps you aren’t ready to retire, but your company needs an infusion of capital to meet its strategic goals. By changing up the ownership of the company, it can increase the perception of value to other investors. Or, if no investors are apparent, selling the company may help to deliver the much-needed capital so the company can continue to grow.
There are many strategic factors that can play a role in the decision to sell:
- Market performance
- Industry risks
- Individual company performance relative to its competitors and overall market performance
- Socio-political and regulatory environment
Sometimes, for the sake of your company, it may be better to sell. You can keep the company growing and prospering, even if it’s not under your direct ownership.
Are you really ready to divest yourself of the company? — This goes beyond just the financial or professional decision, but it’s a mental one. You have to be willing to divest yourself of the company you have labored for years to create. It’s a much bigger decision that you’d realize!
Think about what you’re going to do with your time, now that you’re no longer sinking 40-80 hours a week into your company. Are you going to retire or semi-retire, or will you invest your time and energy into another venture? You will only be truly able to move on from your company if you are mentally prepared to divest yourself. It’s vital that you spend time crafting an exit plan so you can be ready to make the transition when the sale actually happens.
The truth is that the decision to sell your business is not an easy one to make. You have invested so much of your passion, time, money, and energy into this business. Often, your personal and family life have taken a back seat for the sake of your company. So are you really ready to give it all up?
The good news is that there are many good reasons to sell, and it may be simpler than you think. Once you know the business is in good hands and positioned to continue growing, you can rest assured that the company you’ve worked so hard on will endure. You can walk away from the company knowing you did what’s best for both you and your business. That is a feeling of satisfaction that will help you to be sure you’ve made the right choice.
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