10/ 23/ 2006
Many business owners think about selling their business at one time or another. If you've considered selling yours, it's important to determine the right time to do so. Ask yourself these 10 questions before taking any action.
How long have I owned my business?
If you've owned your business only for a short time, it may not reap the financial reward you were hoping for if you sell it now. An established business has many financial advantages over a business that is only a few years old.
Am I planning to retire?
If you are planning to retire in the near future, do your homework now. If you don't want to sell the business yourself by placing ads in local newspapers or trade magazines, find a competent business broker to help you. Get the broker's promise to advertise your business in writing.
How does my business perform compared to competitors in my industry?
If you are not performing as well as your competitors, it may be difficult to sell your business right now. Potential buyers may believe that your business isn't healthy enough. The ideal time to sell your business is during a strong economic cycle because it should be keeping pace with others or outperforming competitors in your industry. If your business is outperforming competitors during a recession, for instance, it may be time to sell.
Can I pass the business onto another family member?
Before you sell your business to strangers, look around to see if there might be a family member interested in buying your business. If so, a relative may decide to keep you on as a part-time consultant.
Is competition moving in?
If you own a small pharmacy, for example, will the big corporate pharmacy chains be closing in around you in a year or two? Do you think that you will lose your customer base? Now may be the time to sell before these changes occur.
Is my business making enough profit for my standard of living?
Is your standard of living higher than your business? If you can't support yourself with your business, it's time to sell.
Do I want to start another business?
Are you as interested in or passionate about this business as you were when you first opened the doors? Does another business venture sound more appealing or exciting to you? If the answers to the two previous questions are "yes," it may be time to sell.
What does the future of my industry look like?
If the future looks bleak, it may be time to sell. Some businesses become obsolete because the public isn't buying a product or service as it did in the past. Something new may have taken its place. If that's the case, sell now.
Is my business in an upswing or recession?
Businesses in an upswing can be attractive to potential buyers. Meanwhile, potential buyers may shy away from businesses in a downswing.
Am I satisfied with what I do?
If your business no longer interests you, it may be time to sell. It isn't pleasant to go to work every day and know that you don't want to be there.
Honestly answering each of these 10 questions about yourself and your business will help clarify whether it's the right time for you to sell it.
