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.
(1) Energy Level: The most common reason most entrepreneurs say they’re selling is because they have 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. The fact is that even though a business can be very profitable and a great ongoing operation, the owner can become bored and seeks 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) New Business Opportunity: The second most common reason a business owner decides to sell their business is due to them looking for their next business opportunity. 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.
(3) Life Events: The third most common reason a business owner decides to sell their business is due to 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.
(4) Changes in the Marketplace: The fourth most common reason is due to changes 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.
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.