What is the Number One Reason a Business Owner Decides to Sell Their 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, the single reason that most entrepreneurs say they’re selling is because they run out of energy. They no longer have the spark it takes to drive them in the right direction; the thrill is gone. A business cannot be stagnant – either it grows or it dies, and it takes energy to grow.

Buyers often think retirement and illness are the only legitimate reasons businesses go on the market. We have a saying in our firm: “Sure, the owner is selling for health reasons – he’s sick of the business.”

The fact is that even though a business can be very profitable and a great ongoing operation, the owner can become bored and seek another challenge.

We once had a client interested in selling his business. He was only 39 years old and making $1.5 million profit each year – yet he couldn’t wait to get rid of the business.

Several potential buyers expressed skepticism about his reason for selling. They thought there must be some underlying problems that he didn’t want to reveal. “Why doesn’t he just hire some MBA who is making $100,000 a year and pay him $200,000 a year and then go lie on some beach somewhere and make $1.3 million profit to do nothing,” one buyer suggested.

We posed that question to the client, and he replied just like every other successful entrepreneur would answer it: “after a few weeks on the beach, I would be bored stiff.” He went on to explain: “It’s still my money and my reputation on the line, so I would be calling the guy I hired and checking on him a couple times a day. And I want to start something else, have another challenge. I do not need the headache of checking on someone else. I just want to focus on my new venture.”

Another Benjamin Ross Group client, who was 32 years old, started a very successful business when she was 20, but after 12 years became bored. With no real challenges to face, she had trouble getting motivated each day. She was worried that if she did not sell when she was young, she would be doing the same thing her entire life, and she desperately wanted variety.

The problem was that this woman was making about $250,000 a year and had been doing that for some time; the business had produced a very nice lifestyle for her. Her friends and family could not understand why she would want to give up such a good thing.

The client explained that she needed a new challenge, something that would get her entrepreneurial juices flowing again. She needed a new goal. Surprisingly, money is not a long-term motivating factor to most entrepreneurs. It’s just a way to keep score.

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.

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.

By | 2017-12-21T10:44:55-05:00 February 1st, 2016|Blogs, Featured|Comments Off on What is the Number One Reason a Business Owner Decides to Sell Their Business?

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