When is the right time to sell my business? This is a question I am asked often.
Truthfully, there’s no right or wrong answer because every individual situation is different. Unfortunately, there have been many times that I have seen people presented with an opportunity to sell their business. For whatever reason, they chose not to sell and ended up regretting it later. I am willing to bet that there’s a whole bunch of business owners who pre-pandemic had offers on the table and decided not to sell. Then once the pandemic struck, their business was closed entirely due to lockdowns and restrictions. Unfortunately, we have seen massive companies bite the bullet in this crisis, and I’m sure many more small businesses were similarly affected.
The most significant opportunity for businesses for sale right now is those owned by people from the baby boomer generation. A considerable percentage of businesses are owned by baby boomers, who are retiring at substantial rates, and they’ve got to find a way to transition their businesses somehow. Valuations are a terrible option for small businesses, so a straightforward exit is probably not going to be available to them, or certainly not at the sort of level they would benefit from.
If you are a baby boomer, and you have been on the fence about when the right time is to exit your business, I am here to tell you that the right time to sell your businesses is now. However, being ready to sell is an entirely different story.
The first thing you need to do is ask yourself if you are redundant from your business? This means, do you have a great management team running the business for you? If your answer is yes, you’re redundant from your business; you could start the process of selling it now.
If you’re not, then your number one goal has to be to make yourself redundant from your business. The reason for this is simple. Most people don’t realize that if you don’t have a good succession plan in place, you’re going to be selling the business with you in it. You’ll end up stuck in the business as an employee, or you’re going to have a large amount of the deal consideration (the money that you’re going to receive) attached to your future performance, and you’re handing over the business to the next generation who are going to be running it.
Step One: Succession Planning
Succession planning is key, but it’s tough to do through targeted employment. I’ve always found it very hard to recruit good management into succession planning because it is unpredictable. Half the time it works, the other half it’s a disaster, and the whole business is destroyed. That’s just not a risk most people are willing to take at the end of a long, healthy career.
As you have probably surmised by now, my solution to everything in life is to go buy a business—hence the answer to the management issue is to acquire or merge with a company with a great management team already in place. It will give you a broader depth of management in your own business and enable you to step back into a non-executive role within your company.
This makes perfect sense because these people are already successfully running a similar business to yours. Once you merged or acquired them, they would continue to run the business successfully. There is no guesswork involved because you’re not recruiting somebody who’s looking for a job and hoping they can run a business like yours; these are people who have proven they are doing so in the present.
Step Two: Bite the Bullet and Sell Now
I say this because life is unpredictable, and we live in unprecedented times. While your business may be doing well right now, you can’t predict what the future will bring and not knowing what’s around the corner is a risk—risks like a global pandemic, or massive companies like Amazon getting involved in your sector and stealing your sales, or Google coming along and providing your service for free.
There are so many disruptive technologies coming to market now that this can be a significant factor in deciding whether to sell your business if you haven’t been able to keep up with the advances. Things like task automation, A.I., and cryptocurrency are making waves throughout multiple industries. This is the age of one-click ordering, next-day delivery, digital currency, and instant access via the cloud. When it’s your industry’s turn to be completely flipped on its head, you’ll have wished you got out sooner.
If you’re ready to sell your business or wondering how you can get in on the action, pick up a copy of my book, Go Do Deals or check out my Harbour Club course, where I teach members the ins and outs of getting deals done.
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