How do you know when it's time to sell your business?

Ask an old surfer....it's not too dissimilar to catching the perfect wave.....

In a perfect world, the exiting of our business would be planned, well ahead of time. In fact, the timing and what you want to achieve from the exit financially and personally should have been thought of at the onset. As business owners, we should always have the destination in mind as a point to navigate the business and refer to in decisions that are made along the way.

So, timing is crucial should be planned, where you the owner are calling the shots and deciding on a timeline for maximum gain.

When we look back in time at successful entrepreneurs not only entering the marketplace but selling for greatest gain or top dollar, what common denominator seems to be significant? I would make the observation that it was all to do with timing.

A little-known company a few years prior to YouTube that launched with a similar business model only to fall into obscurity. The reason...video watching was still frustrated by poor download speeds. A couple of years later, YouTube appears, download speeds had greatly improved and a multi billion $ business emerged…. timing.

During the video rental boom of the 80’s, who ever thought that Blockbuster would cease to exist? It’s one thing to know when to get into something but it’s another to know when to get out…. timing.

Just as a surfer paddles to the ocean, is lifted by the swell and catches the wave at the perfect moment, the surfer always remembers that too soon or too late could spell disaster...timing.

In business, there is something we call the “bell curve”.

There is always a start, there is growth and then a peak will be reached. After, there is a downturn. This cycle is true whether the life cycle of the business is 1 year or 100 years. One observation is that the curve of growth and increase tends to be less inclined than the curve of decline.

In selling a business, the optimum time is just before reaching the crest of the curve. On the incline, confidence is more abundant, decisions are made without panic or fear of the future. The culture of the business and those leading it tend to convey an entity that is not bleeding so the predators cannot smell blood.

Don’t let compassion overwhelm you and let guilt creep in. Remember that while that maybe the crest of your peak approaching, that under new management the bell curve of success has every chance of starting again. Your business will provide equal possibilities of opportunity under their passion and purpose.

Be available and open to those occasions when unsolicited interest comes from a strategic buyer and with it the opportunity to negotiate at your terms and your pace.

Unfortunately, it is all too common for reasons other than a brilliant strategy that the decision is made to sell. Like with many things in life, we can end up procrastinating on a decision that needed to be made and then circumstance finally pushes us into action...voluntarily but mostly forced.

When things are getting tough and the excitement is just not there anymore, you know change has to be on the horizon. Burnout and boredom do not suddenly arrive one day, more often than not the owner has seen the writing on the wall and kept suppressing it until finally one day it prompts, through a breaking event or even something not that significant, the declaration that it is time to sell.

For reasons only known to those that have truly followed their passion and put their own money on the line, the decision is still not easy to make. It can be tough to finally pull the plug and sell a business that you or previous generations before you have put so much passion and hard work into.

Often you will look back and think “was it worth it?” When you add up the hours of unpaid labor and times when budgets were squeezed and you were the first to sacrifice. Yet it gave you the opportunity to be your own boss, add to your identity in the community and the freedom to receive a few perks along the way, also to give back in ways that otherwise may not have been possible.

A business that's on the incline of the curve tends to be an easier one to sell, all too often a business is brought to market as they have peaked at the crest and started to experience the decline.

         So, what are the common events that signify you're nearing the crest of the bell curve?

• Burned out
• Health
• Retirement
• Separation of partnership
• Under capitalized
• Technology creating redundancy in your industry
• New platforms such as Uber and the Taxicab industry
• Change in purpose as to why you entered this business

The list goes on….

Your success and legacy as an entrepreneur will be as much reflected not only on how you saw the opportunity and capitalized on it but also knowing when to close the door. 

Guy Breading - Helping business owners plan for the most rewarding exit.