01/ 29/ 2008
by Maggie Flynn
Your business hasn't made the money you thought it would. Or the opposite is true: Your business has been lucrative beyond your wildest dreams and buyers are chomping at the bit to take it off your hands. Maybe you're itching to spend more time with your family and friends and your heart just isn't into it anymore. Perhaps you've hit the age you planned to retire by, so that's that.
Small-business owners put a for sale sign in the window for all sorts of reasons, all of them unique and personal. So there is no surefire way to tell if the time is right for you. Instead you must take a close look at your business and your life and decide if it's time to let someone else take over the business you've grown.
Necessary steps
Do you know the value of your business? Get it appraised before you start taking offers. Also, consider the market factors. How profitable was your business for the last few years, and how is the health of your industry in general? If sales are down or your whole industry is in a recession, it might be better to wait it out if you can; you'll receive better offers once things turn around. Also, consult with your advisors to see if there are any steps you can take to make your business more sellable. Make sure you have a good understanding of everything that will be involved in the selling process and decide whether or not the time is right to undertake this major change.
Financial considerations
While it would be ideal to find a buyer who will give you the payment in full and send you off on that long-awaited world cruise, that particular buyer may be hard to find. In fact, many small-business owners end up financing their buyer. So ask yourself if you're in a financial situation where you can receive an initial down payment and then make due with a slow payoff. In these cases, it will usually take between five and ten years before the buyer pays you off completely.
In this case, you still have a stake in the business for the duration of time you're receiving payments. If the new owners don't do a good job of managing the business, you may not receive all of the money coming to you, unless the buyer has other assets (home, other businesses) used as leverage when you signed the deal. Therefore, you should keep a hand in the business to make sure the transition is a profitable one. So if part of your fantasy about selling your business is washing your hands of the whole thing, it might not pan out exactly as you imagine it.
Personal factors
Before you plunge ahead with this, ask yourself why you're selling your business. If running a business has become synonymous only with headaches and hassles and you can declare imperatively that you're ready to get out, then you're in the minority. Most business owners feel more conflicted and need to take a closer look at why they want to get out. If, for example, someone has come along and made you a great monetary offer you feel you can't refuse, think about how your life will change once you don't have your business. Does your business give you your sense of purpose? What will replace that? If you enjoy your work, where will you find a similar sense of pleasure? You need to give serious thought to what life will be like without your business, whether you want to retire or work elsewhere, and so on.
This will be one of the biggest decisions of your life and you don't want to leave your business rashly. Taking time with the process should help you figure out if and when you want to say goodbye.
