It’s not always easy for an entrepreneur who has spent his whole career building a company to hand it over. But the challenges that every entrepreneur faces are never fully appreciated until you give up control.
Despite all your best efforts, you might find that your business just doesn’t have an ideal buyer in its current form. Maybe you need to tweak operations or fix some other problem before the company is attractive enough to interest buyers. You might also need to relinquish control and allow a buyer the opportunity to run the company for a while before you can sell it.
You’ll need to be very realistic about your current situation before making this decision, though. Selling has serious consequences; even if you get the money you want, you shouldn’t underestimate the value of the experience and relationships you’re giving up.
Here are some signs you should really consider whether it’s time to sell your company:
1. You want more time to spend with your family or doing other things
If this is the only reason why you want to sell, chances are good that no one will be interested in buying your business. The very nature of a small company is that it demands more time than you can get away from other responsibilities for. No matter how much money you make, the time commitment to running a small business is always greater than you think.
2. The market changed and now your industry looks like a bad bet
You might have a dream and you brought together a great team and work hard at realizing it, but the market doesn’t care about dreams or people’s determination to succeed. The success of an idea is always unpredictable. Don’t be one of those who get sucked in by the romanticism of startups; the chances of failure and the loss of time, money, and effort are very real. If you’ve found yourself in a position where it’s clear that your business is struggling in an industry that has dried up or gone sour, you have to change course or start looking for buyers.
3. Can’t compete with big corporate players anymore
This is a good reason for you to sell. If the market is no longer on your side and you can’t compete, don’t continue on so that you have a house full of inventory to get rid of. Selling now will help minimize your losses instead of letting them grow larger by being stubborn about not wanting to give up on a dream.
4. Lack of profits or growth
If you’re not making money, it may be time to call it quits while ahead rather than potentially lose everything just because you had a great idea many years ago that didn’t work out. It’s easy to get attached to an idea, whether it’s something like launching a new line of products or heading in a new direction by changing your product line. If it doesn’t work out, you’ll lose money and time unless you sell now instead of trying to keep the company afloat by digging deeper into debt with loans that may never be repaid.
5. You don’t like anything about your business anymore
Suppose you’re the one who doesn’t like anything about your company. In that case, it’s time to begin trying to sell before you jeopardize its future even more by making poor decisions that lead to an irreversible downward spiral. When you don’t love what you do anymore, the chances are good that other people won’t either.
If you’re not attracted to the industry anymore, find a buyer now who will continue with your product or direction. You may be surprised what is out there as far as buyers go.
6. Your company has been stagnating for a year or more, and you have no idea how to revive it anyway
This is a very realistic and serious sign that you should consider selling your business. Stagnation is just as bad as decline, if not worse, because it means your company’s future is now in doubt. If you’re the only one with the answers for how to fix things up, then sell now while there are still customers who will be interested in your company.
If you’re the only one who can manage it, you deserve some reward for what you’ve done already, and it’s time for someone with the vision and initiative that are needed to move things forward once more. Hire a company that provides business valuation services to determine how you can get the best out of the sale.
If your company is struggling under the weight of too much product or inventory, a big company will be looking to get rid of all that overhead. You can make a bundle by selling out while you still have something to sell at all instead of going through bankruptcy and trying to scrape together pennies to pay back what you owe. When it comes to company valuation services, make sure you use an independent company with no conflicts of interest in the transaction. Your company’s future is at stake, and it’s in your best interests to get an objective company involved.