When Is the Right Time to Sell Your Business?

Most business owners will think at some time about when they might sell their business (if they are not passing it on to family members). Questions inevitably arise like how will I know when the right time to sell my business is? As someone who has started, scaled and sold a successful business, I am pleased to offer my insights.

While there may be many ‘right times’ to sell a business, there are also ‘wrong times’ to sell. I will cover these in a separate article but these essentially include: when the business is on the downturn (although a ‘fire sale’ in these circumstances may be a suitable alternative to the business going under); when the most recent year’s results have been poor and may not be typical of a normal year’s trading; when planned innovations or future market conditions are going to make demand for your business higher; when you are not clear on what your future plans are (selling a business can for some people take away a fairly significant part of your life purpose and sense of self-worth); and of course when the price you are offered is not reflective of the value of the business (although getting independent advice on this will be important as business owners often think their businesses are worth than they actually are!).

Some indications that now could be the right time to sell your business, or at least to begin the process of looking into what is involved and perhaps testing the market, include:

You feel you have done all you can with the business and may also be tired and at risk of burnout

Starting, scaling and running a successful business takes enormous amounts of energy and requires lots of resilience. During this period, your own personal needs as well as your time with family and friends will likely suffer. While it is possible to juggle competing demands for a period of time, it gets tiring and also leaves little room for other curve balls which can come along in life e.g. sickness and death of a loved one, as an example. Better to quit while you are ahead and before you reach a personal, family or relationship crisis. Also, it could be you have reached the end of the road in terms of how to take the business forward. It may need completely different thinking and skills to run a ￡10 million business compared with a ￡2 million business, so it may need other people to take your business to its next level. And best of all … you will have more freedom over your time as well as the funds to do things you really enjoy with people you want to be with.

Your business is on a growth trajectory

Getting into the mindset of potential business buyers is important. They generally want to purchase successful businesses. If you think of business growth like a hockey stick, the ideal situation is that you have done the ‘grunt’ work/investment needed to get the business off the ground and demonstrate successful operations. Growth is now on an upwards trajectory – ideally the buyer wants to purchase fairly low on the hockey stick growth curve. What can you provide as evidence that future growth is, if not guaranteed, then at least very likely? Obviously, signed contracts from well-established customers,?? recurring revenue, returning customers, budget forecasts, etc will all be part of the evidence you will be presenting.

You have received an offer to buy your business

Receiving an offer to purchase could be an indicator of the right time to sell the business. However, there are of course caveats. Is the offer agreeable to you – not just the price, but the plans for the business and its people as well as the terms of the deal including any earn-out and restricted period? Going through some negotiations, irrespective of whether you end up selling then or not, will still provide valuable insights for a potential future sale. Think carefully though as the next offer may take some time. Without advertising my business for sale, I received contacts from four potential buyers which led to three offers to purchase. I declined the first two potential buyers and struck a deal with the third one.

You have demonstrated that the business can work without you

This is not an easy one for business owners who typically are all over most elements of their business. However, the business value is increased if you can demonstrate that you have a business that is not substantially dependent on you. To achieve this, you need to recruit and train the right people, then trust them and gradually delegate more and more of the tasks and decision-making to your management team. Try taking complete breaks from the business e.g. 1-week; 2-weeks; 1-month, etc and see how it gets on without you. Business buyers generally do not want a business that is overly dependent on the owner as they know that the business owner’s interest and engagement levels will change once s/he has sold their business.

Future innovations and/or market changes may reduce the demand for your business

The advance of technology is changing the face of many businesses. Some may become more valuable, others will become less valuable (think video rental businesses that were overtaken by digital streaming!). There may be a window to sell your business before the tectonic plates that it is standing on move adversely. Anticipating the right time to jump could significantly affect the business sale value.

These are just 5 possible scenarios which could lead you to explore your business sale possibilities. It really is never too early to start thinking and planning for a business sale. I set up my AM Bid business with a stated aim to sell within 8 to 10 years … and sold the company at 8 years 9 months. To arrange a free 30-minute confidential introductory chat, please contact me at:

[email protected]

For more information on the help that is available for business owners, please visit:

Business Sale Basecamp - Enabling you and your business to be sale ready