Deciding to sell a business you have founded, nurtured, and grown can be agonizing -- or liberating. Owners choose to sell their businesses for many reasons, from retirement to a hope that new management can turn a greater profit.
Saleability
Consider the factors that make your business saleable -- or not. Your profits history, current sales trends, location, and the condition of your premises and equipment all affect your business's desirability. There are ways to make your business appear more profitable, such as lowering your own salary or removing perks that you've been getting , such as travel and expensive seminars. Then ask yourself: Is my business saleable for a reasonable price?
Readiness
Think about these additional questions to make sure you're ready to move onto the next step:
- Will I get enough money to justify all my hard work?
- Will I really be improving my financial or personal situation?
- Do I want to maintain a relationship with the business, perhaps as a part-time employee or consultant?
- What will I do next? (If it might in any way compete with your old business, don't sign an overly restrictive noncompete agreement with the buyer when you sell.)
- Are there steps I can take to make the business more attractive to potential buyers?
- Is this the best time to sell?
Timing
Next, choose the best time to sell your business. This will be affected by business cycles, which wax and wane with the economy. Obviously, you'd like to sell your business when market demand is high. If your geographical area or business sector is experiencing a recession, you may want to wait until things improve. Other factors that can help you decide when to sell include changes in the neighborhood, the health of your business, interest rates, and industry trends.
For More Information
Understanding the steps involved in selling your business can help you make a better decision about when and how to go about it. For more information, see The Complete Guide to Selling a Business, by attorney Fred S. Steingold (Nolo). It will walk you through the entire process.
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