Selling a business shouldn’t be something that you think of one day and then decide it’s time. It takes planning, timing, and a lot of work before you can sell it for what it’s worth. Of course, you may be able to find a buyer fairly fast if you are willing to sell for cheap, but why lose out on money that you have been working so hard to get? We are going to be covering why it is so important to time the sale of your business so that you can maximize your profits.
One of the biggest reasons you will want to time your sale is because the market might be crowded with similar businesses for sale. The more businesses for sale, the less buyers are willing to pay for it.
Obviously there are other factors such as brand recognition, market share, etc… But if you wait until the competition is low, you will have a much easier time finding a buyer that is willing to pay what you want.
Also researching the sales of other, similar companies will give you a better idea of how much you can really make once you are finished selling the company. Although every company is going to be different, you will know what buyers are looking to spend.
Ensure A Steady Increase In Revenue
You shouldn’t try and sell a company when it is seeing a decline in revenue. The main reason for this is that buyers won’t be willing to spend as much because they see the drop. If your business has been growing consistently for a year, but then sees some less profitable months, don’t sell right away. Wait until you start to see your revenue you go up . Although you might want to just dump the company onto someone else if you hit a road block, it will be well worth it to just stick it out during the hard times to make more money in the future.
Another thing that you will want to watch out for is not to let the revenues slip away once you have made the decision to sell. Entrepreneurs that are new to this situation might end up focusing more on the sale of the company than the sales, which then drops the revenue. Although the sale will take up a lot of time and effort, you need to continue to show your potential buyers that the company is thriving. Any drops in sales will only make buyers think twice before becoming interested.
Review The Valuation
A valuation from an experienced and professional business valuator can tell you a lot about whether you should be selling now or not. They will go through everything regarding your company and then report to you, letting you know how much it is worth, estimated future revenues, and plenty more. Using this information, you can decide whether or not selling is the right thing to do. If you are projected to increase revenue by 300% in 2 months, you will probably want to hang on to the company for an extra couple months so that when you do sell it, it’s worth much more. At the same time, you may end up wanting to sell it right away because your future growth is minimal, but still steady. The choice is yours, but a valuation can be a great asset to letting you know when the best time for sale is.
Ensure The Company Is Profitable Without You
Prior to selling the company, you need to make sure that it is able to keep a steady income without you running things. If you started the business all by yourself, chances are you have been the reason behind its success. While that is amazing, will the new owner be happy with his purchase once the deal goes through? You may think this isn’t your problem, but it is. Buyers will check to see if the business is running properly prior to buying it, so make sure your employees, processes & procedures, and everything else are in order prior to putting the company up for sale.
There are many other ways to time the sale, but these examples should help you out. The biggest thing is to just make sure the time is right and not to rush the whole process. The more rushed it is, the bigger chance you won’t get a much money as you deserve.