When is the Right Time to Sell Your Business?

Buy low and sell high is the adage of Wall Street. But what about Main Street businesses, when is the right time to sell?

Can a business bring a fair value in a recession? The answer surprisingly is yes. A good strong business will fetch a good price in most economies. One reason is that during a recession more Buyers enter the market looking to “purchase” a job. More Buyers in the market increases the odds that the business will sell and for a fair price. It seems that leading up to a recession, consumer confidence wanes and individuals avoid risk taking. But even in a risk avoidance period, good businesses sell.

Seasonality has some bearing, but mostly on the length of time a business takes to sell. After the first of the year many Buyers enter the market after reviewing their career past and vow to make changes. They may have been encouraged at a holiday party by someone who is a business owner. Businesses can enter the market a little past this peak by waiting until their tax returns are completed usually by the March 15th corporate tax filing date. Summer tends to be a slower period as vacation scheduled slow up time tables. The 4th quarter can be filled with diversions as many firms have their peak season and individuals’ holiday schedules and parties consume time and lengthen the process.

Even more important than recessions and seasonality is the condition of the business. This can be greatly affected by the following items. Selling your business before these conditions affect your business will have the largest impact:

Sell before:
You get burned out. Yes, even the business owner can get burned out.
Capital constraints strangle the business.
Stress takes a toll on your family relationships.
Medical reasons force you to sell. Have a plan ready, now.
Complacency erodes earnings.

All of these five real life occurrences affect a business price more than anything else. Make an honest self evaluation to see if any of these are present. If so, your business value will erode as you allow these to fester.

You built a successful business on planning, hard work and a little luck. Improve your odds of selling your business for a higher and fair price by recognizing these real life events and make a plan to deal with these issues before they affect the value of your business.

Start by contacting a licensed business broker. Set up a meeting date and ask a lot of questions. A business broker can tell you what you need to do to prepare the business for sale, instruct you on what things increase a businesses value and will provide a market price analysis at no cost. Business brokers perform this service in the hope that when the day is right to sell your business, you will contact them.
Armed with the helpful information and a market price you can start to make your future plans for the business. Plan to sell before you need to sell.