When Is the Right Time to Sell Your Business?

Selling your business is the toughest decision of an entrepreneur’s journey. It involves a lot of deliberation, screening potential buyers, and negotiations to find a suitable owner who can take it to the next level. It is not easy to give up something you have built with passion, hard work and a lot of love. Thus, entrepreneurs need to be sure if they and their businesses are ready for the handover.

The timing will determine the profitability of the deal because a badly timed sale can lead to losses. With the help of the internet, you can sell business online to reduce the hassle, time and effort that goes into the task. However, the time of the sale needs to be decided in advance to avoid getting affected by external conditions and internal conflicts. Here is how you can choose the perfect time for selling your business.

Determine the Viability of Your Business

As soon as the idea of selling your business crosses your mind, you must begin working on making your company more attractive to potential buyers. Whether you are selling because of health concerns, old age, saturation level, travel plans or any other reason, you need to understand that it will not happen in a day. You will have to put two to three years into getting your entity ready for the handover.

•       Fuel the Engine

The first step is to analyse the strengths and weaknesses of the business and eliminate the redundant functions. Develop the strengths further to turn them into core competencies and get rid of the weak links.

•       Business Lifecycle Stage

The business should be in its growth stage when it is put up for sale as this is the most lucrative phase for potential buyers. If the business has reached maturity, you need to revive its growth phase by boosting sales, introducing new products, or entering new markets.

•       Financial Health

Every potential buyer will look at the financial status of the business before starting the evaluation. Thus, you need to make sure that there are no significant debts, no overdue payments, and pending incomings. Make sure that the profits have been steadily growing over the quarters, financial projections are favourable, and the cash flow is positive.

•     Build A Strong Team

The staff is the backbone of the business and building a team of talented and trained members is necessary to attract buyers. It can work as an appealing selling point as the new owner will not have to struggle in making things work in the new set-up.

Determine the Economic Factors

Besides the internal factors, the external environment also plays a pivotal role at the time of the sale.

•       Economic Conditions

Identify the economic health of the city and state where you are operating and assess whether it is sluggish or growing. Find out the market trends related to mergers and acquisitions. Check how many businesses were sold in the current year and at what average price. If there has been a high number of transactions at decent values, you can go ahead and put your business up for sale.

•       Market Situation

Favourable market conditions boost buyers’ confidence. Thus, the seller must examine the buyer activity in the region. The interest rate must be on the lower side so that financing can be easier for the buyers. The taxes should be low to support the purchase and financing should be affordable.

•       Industry Developments

The industry where you are operating should be making profits and contributing to the GDP of the state in a significant manner. For example, if you are in the real estate business, the housing sector should be performing exceptionally well to get the best price for your venture. It will help you to make an excellent return on investment as there will be a huge demand for such businesses in the industry.

•       Seller’s Market

Entrepreneurs must wait for a seller’s market to begin the selling process as this is the time when there is high demand for businesses while supply is limited. Thus, the seller has the upper hand and can get the best price. Industry experts and financial advisors can help in understanding the market forces at work and identify the right time to sell.

Determine Your Inclination and Preparation

The business owner must assess his own readiness to part with the business as it can be challenging to say goodbye. You need to overcome the emotional upheaval that may make you take a step back from the impending sale. To be completely sure of your decision, ask yourself whether you can run the business for a few more years or are ready to pass it on to a competent entrepreneur who can make it progress.

Also, you need to be mentally prepared for the screening process, discussions, negotiations, and legal consultations. You must have an exit plan in place that will allow smooth transitioning of power to the new owner. It must involve the support of the staff in welcoming and including the new CEO in the system. In addition, you must get all the paperwork in place for the acquisition and get things organised within the business for the buyers.

Wrapping Up

If you are planning to sell your business online, make sure that you take all the internal and external factors into consideration along with your personal preparedness. It will help you to identify the ideal time for the sale.