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By Ray Blakney
Are you considering selling the business that you founded years ago and have been steadily growing ever since? Whether it’s for financial reasons, you want to launch a new company, or you are ready to retire, selling your business will open up a whole new life chapter for you.
It can be difficult, however, for even the most seasoned serial entrepreneur to know when the time is finally right to sell their company. All of the “what-ifs” may start arising, and then they are stuck in a loop of wanting to sell but not knowing if it is really the right choice.
Don’t allow yourself to also get stuck in this endless cycle, as you may find yourself in the exact same spot years down the line. As a serial entrepreneur, I have sold four businesses. In my entrepreneurial journey, I have discovered these five questions to ask yourself to help you ascertain if the time is right for you to sell your company.
How to decide whether to sell your business
1. Am I still passionate about my current business?
Even if your company is profitable and growing, a lack of passion and excitement over the business can lead to stress, anxiety, and an absence of overall life fulfillment. This can ultimately lead to even more health issues and the business can also suffer as a result.
If you are bored every single workday and constantly thinking of all the other things you would rather be doing, then your heart isn’t in the company anymore and it is best to sell it. You can then focus on other endeavors that light your entrepreneurial fire (or happily retire).
2. What are my financial goals for the future?
It is paramount to ensure your future will be set if you do decide to move forward and sell your business. So ask yourself how much money you want saved up for your retirement and whether you plan to make any major purchases (like buying a new home) in the future. Also, consider your recurring expenses and whether you would need to stick to a monthly budget. And think about all the other ways you could invest the funds. This will help you set the lowest amount of money you would be willing to sell your company for.
Keep in mind, however, that you will lose 20 to 30% of the funds from your company’s sale to taxes, lawyers, and brokerage fees before the deal even closes. So if the money you would actually make after fees are taken out is less than the lowest you would sell your business for, then selling your company should be a hard no. However, if the money you would make is above the amount you set, then you can move forward and ask yourself the next questions.
3. If I sell, what would I likely do next?
Most entrepreneurs are creative beings who get so much fulfillment from building things. This creative fire and drive won’t just dissipate once they sell their companies—they will likely think of new businesses to launch. This question, therefore, is pivotal to ask yourself, if you decide you would launch a very similar business to the one you were planning to sell. If this is the case, it would probably be in your best interest to keep your company rather than go through the long process of planning, building, and growing a brand-new business.
4. Could I grow my current business to an even larger size?
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Going off of the last question, instead of selling your company, you could brainstorm new ways to grow it. Maybe you can offer a whole new product or service for a specific demographic you haven’t targeted before. Or you can start offering franchise opportunities that will expand your current empire. If you haven’t already, ask your employees for insight on ways they would improve the business. They may have great ideas you haven’t thought of that can really revolutionize your enterprise and bring it to new heights.
On the other hand, if you know you would take a whole new path in life or would launch a very different business than the one you are thinking of selling, then ask yourself the next question.
5. Will the buyer prioritize my team’s well-being and company vision?
It is pivotal to make sure that those who buy your company will take care of your team and make operational decisions in line with your business vision. Ensuring the well-being of the employees who helped you build your company will prevent any regrets about selling your business later down the line. Take it from me—I sold my first business only for the money, and I did not like the way the new owner treated my team. I regret it to this day.
Also, you would likely regret selling to someone who doesn’t really care about the mission your business was working to achieve and makes business changes that conflict with your vision. Making sure the buyer will prioritize the company vision protects your entrepreneurial legacy, credibility, and overall reputation. Think about it: if your name is still attached to the business in any form (even if it is just on the “About Us” page of the company website), any potential negativity surrounding the business in the future may reflect poorly on you.
Should you sell your business?
It is so exciting that you are thinking of selling your business! Doing so can open up many new doors of opportunity. However, before you move forward with the selling process, ask yourself these five questions to ascertain whether the time is truly right.
You may realize that it would be better to keep your business and brainstorm new ways to grow it. Asking these questions will also help you prevent any regrets you can have later down the line and protect your entrepreneurial legacy.
FAQs on making the decision to sell a business
What is a good reason to sell a business?
One good reason to sell your business is that you think you have taken it as far as you either know how, are willing to, or want to take it.
How would you decide when to sell a business?
When I have had 12 months of not wanting to work on a business, I know it is time to sell. This is regardless of whether the business is still growing or not. Everybody goes through days, weeks, or even months of not wanting to work on a business. Those are not necessarily times to quit, but if it has been a year, then it is time to look for something else.
How stressful is selling a business?
There are two parts to selling–the first is the listing and negotiations. This can be a bit stressful, but as long as you know what you are willing and not willing to negotiate, it shouldn't be bad. The more stressful part is after the sale. There is usually a buy-out period where you are in the business, but not really in the business anymore. This time can be more confusing and stressful.
About the Author
Post by:
Ray Blakney
Ray Blakney has nearly two decades of business experience that have included starting, growing, and leading over a dozen profitable companies, along with hundreds of staff from across the United States and Latin America. His newest venture, Kairos Venture Studios, is on a mission to bring a fresh take to online businesses in the Latin American market by launching 12 new businesses in the region each year. A business coach, mentor, and advisor, Ray is also the creator of the 9 Year Letter™ Method (a goal-setting system for the four pillars of life: relationships, financial, health and fun).
Company: Kairos Venture Studios
Website:
www.rayblakney.com
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