Remember how high your energy level was when you first started your business? You couldn’t wait to get in to work each morning, anxious to take on the challenges of each new day. You arrived early and stayed late, hardly noticing the relentless march of time. It was all about the pursuit of success.
Do you have the same feelings now? Do you view your business with the same boundless enthusiasm? Are you looking for new ways of doing things, for new products and new markets? Or have you lost the drive, the sense of adventure that once coursed through your veins, the can-do attitude that helped you meet adversity head-on? If so, you might want to check out this list of the 4 most common signs you’re ready to sell your business.
The fact is, every business has a natural life cycle – an inexorable journey that begins with promise and potential, is propelled by success, and is slowed by adversity, but that eventually comes to a conclusion for any number of reasons.
There are two outcomes for every business: to be acquired or to close the doors and liquidate. No entrepreneur wants to close the doors, but the fact is that only 20% of businesses on the market actually sell.
Below are the 4 most common signs you’re ready to sell your business:
1. Lack of energy can signal you’re ready to sell your business.
Most people assume that the only real reasons people sell a business are because of retirement or illness. While those certainly are important factors, one of the most common signs you’re ready to sell your business is most likely due to lack of energy – you no longer have the spark it takes to drive your business in the right direction. A business cannot be stagnant – either it grows or it dies, and it takes energy to grow.
The fact is that even though a business can be very profitable and a great ongoing operation, the owner can become bored and want to tackle another challenge.
It’s the same reason why people change jobs: the prospect of a new challenge, of a better opportunity, of a brighter future. In that respect, most business owners are not that much different from their employees – perhaps just a bit more impatient.
2. You find yourself concerned with other business interests.
The second most common sign you’re ready to sell your business could be an interest in a new business opportunity. Most entrepreneurs are always looking for a new challenge. Ideas are always bubbling to the surface. Most can be discarded quickly as being too expensive, too time-consuming, or too impractical.
But occasionally a viable opportunity will present itself. A business owner will identify a new market with great growth potential but realize he cannot run both companies at the same time and be successful with either.
We also run across owners of companies who have many different franchises. Some of these people manage their fleet of stores like a stock portfolio. They buy and sell some businesses each year based on many factors. These are viable businesses but they do not fit into their strategic plan.
Most of the time, the capital needed to launch the new business comes from their equity in the old business.
3. Life events change your outlook.
The third most common sign you’re ready to sell your business could be a change in life events. There are always life events that can influence the sale of a business. Some can be anticipated – retirement, for example. Others, such as serious illness, death, divorce, or partner issues, can also occur with little or no warning.
The saddest situations are the sellers who come to us and have to sell because of unexpected reasons and the business has not been positioned to sell.
Divorce is another major reason that business owners may be forced to sell their business. Spouses play a significant role in many companies’ operations, and divorce can have a direct effect on the health of the business. Often, divorce settlements require a business to be sold so that both parties can receive proper compensation.
Divorce is not just from a spouse; a very common reason under the “life events” category is divorce from partnerships. We see this all the time. Two people have a common goal – or so they think – so they form a business partnership. Many partnerships fall apart however, usually because of changes over time to what the partners thought was a common goal. Partnership breakups can be very messy. What happens if the owners do not keep their eye on the exit is that there is nothing to sell in the end.
4. Changes in the marketplace can signal it’s time to move on.
The fourth most common sign you’re ready to sell your business are changes that occur in the marketplace. These can include the need for expensive new technology or new equipment.
The printing industry is a dramatic example of how technology can affect a business. Years ago, the Benjamin Ross Group had to rely on a professional printing company to do things that we can do today with our desktop computers and a relatively inexpensive laser printer. Many printing companies came to us to sell their business when they did not have the funds to upgrade their equipment.
Other changes in the marketplace could be the arrival of new competition, or a change in the demographic of the customers. In most cases, an infusion of cash is needed to meet these challenges. A sale, merger, or acquisition of the business sometimes is the best answer in such situations.
Want Help Moving On?
If you are thinking about selling your business, please contact the Benjamin Ross Group to speak with an advisor who can help you start the process, or download our Selling a Business Checklist, which outlines what is required to get started.