When to sell a business is the most common question among business owners. The time to sell is when you want to move on to the next challenge or retire. If you don’t move on when your heart is no longer into it, you may do harm to your business. Don’t worry about if you’re selling when the market is at the top because no one really knows where that is; or how far it may go down. Efficient markets price everything from gasoline to cheese fairly and your business is no different. This is true as long as there is a liquid market for your business; meaning there are enough buyers and sellers to create an efficient market. People worry about not getting enough money for their business instead of worrying about their buying power. In a buyer’s market, buyers demand a discount so you may get less for your business, but you also get more buying power from the sale of your business. In a seller’s market, you may collect more money at closing, but you will have less buying power as goods and services are priced at a premium. As long as you create an efficient market for your business, the time to sell is whenever you are ready.
A strong business is worth more money than a weak business. Every business owner should always be strengthening their business to enhance its value. Don’t worry if your business isn’t perfect, none are and the imperfections in your business may be just the thing that gets it sold. People like to buy businesses with the right things wrong. If a manufacturing company had a great line of products but poor marketing, a marketing person could buy the company and maintain existing product line and add strong marketing. The business would be more valuable for the new owner after marketing was added.
Your business must be presented in a way to create an efficient market so you get maximum fair market value upon sale of the business. This process must be done without anyone knowing your business is for sale until you leave the closing table. Failure to do this could result in the loss of key employees, customers and vendors.
Business brokers or business intermediaries are commonly used to connect buyers and sellers. Business broker typically collect a fee of 10-12% of the sales price, but some will negotiate depending on the circumstance. It is possible to sell a business on your own, but you must carefully plan how you will present the business to the largest amount of buyers while maintaining complete anonymity so no one knows it’s for sale.
