If you are a business owner approaching retirement age, or you wish to sell your business and move on to another venture, you may wonder when it is the right time to sell.
As with many areas of life, there is rarely one strong indicator to tell you when it’s the ideal time to make a major change. On the other hand, there are several things to consider when preparing to sell your business. Taken together, these factors can help you enter the market when the time is right.
The Strength of the Market
Whether you are dealing with residential or commercial real estate, the market plays a significant role in how a business is likely to perform. For many business owners, the slumping market meant staying in the game even if they were ready to get out. Now that the market has rebounded, you’re much more likely to get a fair price for your business.
The Strength of Your Business
The state of your business is also an important factor in the decision to sell. If you own assets, such as a building or warehouse, is it in good condition? Do you have a well-developed customer list or a steady stream of repeat customers? In many cases, it’s a good idea to conduct a business valuation to determine the value of your business as a whole. On the other hand, an underperforming business can be easy to sell to a specific type of buyer. In some cases, it may make sense to recoup as much as you can and exit quickly before your financial situation becomes unstable.
Your Retirement Readiness
If you have built your business from the ground up, you probably (and understandably) feel emotionally attached to it. Many business owners find it challenging to pass control to a successor. If you are well-prepared for retirement, however, it is probably an ideal time to implement the transition process.
You Have a Buyer
Finding the right buyer is usually just as important as finding the right time to sell. Perhaps a longtime partner wishes to take over, or an adult child has expressed an interest in purchasing your share of the business. If a qualified buyer is prepared to take over, it’s probably a good idea to sell.