In this series of articles, we are going over the top mistakes business owners make when they decide to sell their business.
Clarity and decisiveness are the qualities that make a businessman great! These are also the qualities you need when looking to find a lucrative deal for your business. A clutter-free approach to selling keeps you away from the mistakes that can prove deadly to your retirement prospects.
Settling for any of the mistakes we’ve been going through in this series can eliminate your chances to achieve the highest value for the business, that is, if the business sells at all. We highly recommend addressing these mistakes well in advance of placing the business on sale.
Deadly Mistake: Waiting Too Long
The fifth deadliest mistake is waiting too long to sell your business. When it comes to selling a business, timing is important. Retirement may be an alluring prospect; however, selling your business can be a difficult and time-consuming process. After all, you have spent years immersed in the day-to-day operations and planning the strategies to boost the growth of your business. It is all you know! Your emotional attachment with your business and your indecisiveness can be a mistake that can cost you a financially viable deal.
If your end game is to successfully sell your business, the time to prepare is now. Many business owners try to delay the inevitable in hopes to fully benefit from the investments they have made in their business. Some do not want to disrupt the momentum they have painstakingly generated, while others fail to find the time to seriously think about the intricacies of the sales process. These are nothing but excuses to procrastinate over one of the most important financial decisions they will ever make in their lifetime.
It definitely is a good idea to sell when your business is on top of the game; however, how long are you willing to wait for this? Many business owners fail to realize the “peak” of their business, and try to sell it off when the business has lost all of its traction. A company’s performance is not the only factor that can get you high market valuation anyway. Factors like economic environment and capital market conditions also dictate what you can get for your business.
Knowing all of the factors that should dictate the timing of your sale is crucial. Low interest rates and the amount of credit available to potential buyers is just the kind of economic environment that can land you a great deal. This conducive economic window does not remain open forever though. While trying to improve the success markers of your business, you might miss the opportunity to sell your business in a financial and economic climate that can get your business valued steeply.
This mistake has really shown its ugly head during this economic downturn. Baby Boomers have been trying to retire and probably never thought they would have to go through such a headache right when they were looking to sell their business and retire. When they finally decided it is time to throw in the towel, the market is void of potential buyers. Many business owners have found that waiting for the right time to sell just leads them to miss a ripe selling opportunity.
When Is The Best Time To Sell My Business?
Ironically, perhaps the best time to sell your business is when you do not have to! You cannot expect a good deal when your back is against the wall. Most business owners hesitate to sell when the times are good. Selling when there is no other option understandably gets you a less-than-enviable deal. Any issue such as the business owners getting burnt out, the owner having health issues and/or the business losing a key customer can make a business virtually unsellable, or sellable at a much reduced value.
A burnt out or unhealthy owner does not have the energy and will necessary to keep the business growing and expanding. Little effort is put in to seek new markets and tap into new customer bases. The staff may become uninspired, the key customers may head elsewhere and the business may lose its wings. Buyers are not interested in buying businesses on a downward curve. Many business owners find themselves in similar situations and are forced to sell from a place of weakness.
Your retirement plan may completely depend on a successful sale of your business. If so, you cannot let your declining energies bring down the value of your business. It is important that you recognize the right time to sell your business and put it up for sale when it is still going strong. Buyers are not only interested in stability; they are looking to buy businesses that are likely to grow in the future. Selling your business at its peak while the “seller’s window” is open is your best bet.
Building The Business Forward
If selling is the end game, you should build your business with the intention to sell. Your business should be most prepared to make the best of the lucrative opportunities if and when they present themselves. Too many businesses have suffered from their owner’s lack of preparedness, confusion, and hesitation to sell. Do not let your business suffer such a fate! Preparing your business to be in the best possible shape takes serious time and effort.
Rome wasn’t built in a day. You need to be prepared so that when opportunity presents itself, you can feel satisfied because of being absolutely ready. Having a well-thought-out plan is crucial as well. Anticipating economic conditions and the performance of your company to select a time that is most likely to get you the desired results is certainly the right way to go. Without knowing the ideal time frame to sell the business, it is impossible to determine whether it is too early to place your business on the market.
How To Avoid This Deadly Mistake
Do not wait too long to sell your business just because you think your business isn’t ready. Make your business ready! Taking advantage of the services and consultation provided by a qualified and experienced advisory team can help you prepare. A competent advisor can help determine the ideal timeframe to sell the business, and chart the exact steps to make ahead of time to begin the process on proper footing. This can make all the difference when it comes to selling your business for substantial profit.
In the next article in this series, we will explore yet another mistake people make when they finally decide to sell their business.