Top 5 Signs It's Time to Sell Your Business
Owning a business is an incredibly rewarding experience for most entrepreneurs. And after years, decades, even a lifetime of running your prized small business as best as you can, the writings on the wall may be indicating that it is time to consider selling your business.
But is now really the right time to sell your business? Should you wait another 2-3 years? Is the time right to sell it today?
Selling your business doesn't have to be because you have no other choice; you can gracefully bow out before circumstances force you to exit in a dreaded fire sale. The difference between the two recognizes the indications that it's time to exit.
Let’s explore the top 5 signs it’s time to sell your business.
#1 You Are Facing Burnout
When the exhaustion of running the business outweighs your passion, it's time to consider selling your business. It may be because you continuously invested your heart and soul in the company until you feel that you have no more “gas in the tank”, or, you find yourself continuously looking for something new to stimulate your mind.
Although the decision to sell is not always easy, it may be the best move for you and your business in the long run. If you're no longer passionate about the company, the chances are high that you may not be the best person to operate it. Retaining your business at such a point may seem like the safe and logical choice, but what if your business would be best owned and run by a more energized and passionate owner?
Entrepreneurs face burnout at an alarming rate. Sometimes it’s temporary fatigue that you overcome. Other times, burnout is a slow burning feeling that you simply don’t have the energy, focus, or desire to run the business any longer that gets stronger over time.
The truth is, running a business is challenging mentally, emotionally, financially, and physically. And it takes an incredible amount of energy and passion to consistently give 100% of yourself to the same business day in and day out.
Some entrepreneurs can only handle being in business for a period of a few years at a time before they feel burned out. Others take decades to reach the dreaded burnout phase. Regardless of your reasons, if you're experiencing burnout, it could indicate that it's time to sell…before it’s too late.
#2: You Desire a Better Quality of Life
Your business may feel like a child that you have nurtured and fed for years, even decades, of your life. You’ve poured your life savings into it, spent nights and weekends working on it for years, missed your real children’s ball games and recitals to invest time into your business, employees, and customers.
And now, you simply don’t want to continue pouring the same time and energy into your business. And that’s OK!
Whether you have health reasons for selling your business or you are deliberately committing to spending more time with your loved ones, life’s circumstances are a common, and respected, reason for deciding to sell your business.
If you desire more free time, the best way to ensure you spend the next few decades on family time is to sell your business.
Other personal life circumstances that can affect your business include medical conditions, disability, family growth, divorce, or an emergency that requires your time, or your money, to address. Whatever your reasons, these are signs that it’s time to move on from your business.
Many entrepreneurs reach a point where running the business is no longer enjoyable. You could be tired of handling staff issues such as discipline, hiring, firing, or dealing with finances.
As your business grows, some issues may go away, but some get replaced by more minor problems that are still challenging. It starts taking a toll on your physical and mental health, making you desire a stress-free life.
There's no shame in desiring a better quality of life; it's a natural process. Starting a business and then selling it is not an admission of defeat but an excellent way to begin the next step in life and fully monetize your life’s work.
If you find yourself looking forward to not working, looking for flight packages, or browsing travel blogs with an intense desire to have free time, all the time, it’s time to implement an exit strategy.
#3: You Have Staffing Challenges
The COVID-19 pandemic permanently changed the talent acquisition process and strategies. As most businesses struggle to regain their footing, they also have to keep up with these changes and recruit, train, motivate, and retain employees…especially, young employees.
As an entrepreneur, you may already be familiar with hiring and retaining top talent. With the dynamic conditions and unpredictability, it is now more challenging to acquire, train, and keep qualified employees this year, and likely next year as well.
Top candidates are highly sought after and demand higher salaries, more time off, more robust benefits, and unfortunately, many employees don’t want to work as hard as prior generations! This means that the environment for attracting the top talent to run your business is more difficult in 2022 than it EVER has been in the past. This creates a new challenge since you have to impress them enough above your competitors in order to hire them and keep them happy and productive.
If you are approaching retirement age, do you really want to deal with high turnover and training the next generation of your employees, in today’s environment?
If you’re facing such challenges, it may be best to sell your business to a larger entity or more energized individual before the uncanny labor markets and employment environments start to cause your business to suffer, or even fail beyond repair.
#4: Your Industry is Changing
Over the last two decades, technology shifts and advances made multiple industries obsolete. Technology is vital, and required, for most small businesses to maintain their edge and drive growth, customer satisfaction, employee retention, and profits.
If your business is behind in adapting to today’s demand for technology advancement, and the investment of time and capital is beyond your current means, you may consider selling your business to a company with more resources.
A great example is DVDs. There was a time when people paid to purchase DVDs, and such stores were thriving and scaling to accommodate the high numbers (remember Blockbuster Video?).
Video streaming services like Netflix killed the DVD, and businesses in the video and entertainment world had to adapt quickly and catch up for a chance to survive. The few who chose to remain as is end up with businesses no one would buy (hence, Blockbuster Video going bankrupt in 2010).
This shows that no business is truly safe from market changes. Constant innovations affect all industries, some more than others.
If you monitor the changes within your industry and realize you’re struggling to keep up, it’s a sign that you should exit while you can. If you can foresee an upcoming megatrend that could make your business obsolete or irrelevant, it’s best to put your exit plan in motion.
Another aspect to consider is your scalability. Currently, most businesses are no longer able to maintain traditional operational methods. If your business can't scale to accommodate market demands and industry trends, you'll always play catch up and lag behind competitors.
With little or no competing power, your business will become obsolete. As tricky as this reality is to face, you may decide that these changes are worth selling your business to a competitor or younger entrepreneur who can give the business the 10-20 years of hard work it needs to thrive.
#5: You Are Facing Financial Challenges
Managing capital and increasing cash flows is often a challenge for most entrepreneurs. The expected amount, terms, and timing are not always perfect, leading to the accumulation of unmanageable debt.
Such challenges can cause service interruptions or paralyzed business operations. If your business cannot manage expenditures and continue to grow, it may be time to sell.
Investing in marketing activities is an excellent way to ensure your business’s future. However, if you’re consuming capital just to stay afloat, and you are not getting positive returns from marketing and growth initiatives, the future you’re trying to build is not guaranteed.
If your savings are slowly being depleted, you are not seeing the pricing power and positive cash flows you did in the past, and you are starting to dig into your retirement fund to stay afloat, it may be a great time to sell the business.
Is Selling Your Business the Best Move?
One of the most challenging decisions you'll face is deciding to sell your business. It may feel like you're giving up on your life's work, but it could be the best move you'll ever make.
Hopefully, these five signs will give you a new perspective on why you need to sell. It’s best to consult some experts to determine the best terms and the price you deserve for your hard work.
Book a free business valuation call today!