When you sell your business, it’s not simply a financial transaction but one that marks a shift in your lifestyle, focus and even your identity (especially if you’ve owned your business for some time).
Selling a business is a major decision that can significantly impact your life and future, and here on the Finn Blog, we’ve looked in detail at the steps to take to get your business sale ready.
However, any successful business consultant or broker will tell you that having a clear exit strategy and vision is important, no matter where you are in your business owner journey. Therefore, when it comes time for you to consider selling, take a few moments to ask yourself the following questions:
What is my motivation to sell?
Understanding your reasons for putting your business on the market is crucial to how and when you sell. Are you burning the candle at both ends of running your business and looking for a big change? Perhaps you’ve hit retirement age, and this is the next natural chapter for you and your family.
Are you facing a significant change in your financial circumstances or life, such as a growing family? Be honest with yourself, and the answer “I’m ready to try something new” is as valid as any reason. Importantly, be realistic about the status of your business if you’re looking to go to market – a qualified business broker will assist you in lining up all the essential documentation you need, as well as assessing what you could realistically ask for your business.
As you make the mental shift from owner to seller, don’t let rose-tinted glasses get in the way of a great new buyer; in other words, try and think objectively about what your business is worth as a whole and what you’d be happy to walk away with.
What does the future hold for me?
When you sell your business, you mark the end of one important chapter of your life and the start of the next. It’s important to plan ahead for the emotional and day-t0-day impact this can have on you. Are you a keen serial entrepreneur who already has your next business laid out (or perhaps you’re looking to buy up a new one!)? What will your Monday to Friday look like in a world without your business?
Financial planning is key here, whether you’re planning to retire, start a new role within another organisation or invest elsewhere – if you have a lump sum figure in mind for the sale of your business, map out where these funds need to go (whether it’s to your mortgage, cost of living or into another channel), and work out if you will have time for some breathing room or need to have another income stream replace your business immediately.
Going from a business owner to a successful seller overnight can be a shock, and when the excitement of more free time wears off, it’s natural to feel like you’ve lost your groove – have conversations with people close to you and work out how you will fill your time, and what your ‘new normal’ will look like.
Is it the right time to sell?
Timing is a crucial factor in selling your business – ideally, you want to sell when the market and industry you’re in are on the rise. Try to suspend your personal connection to the business – while difficult to do, our judgement is often clouded by sentimentality, so if you’ve consulted an expert and feel it’s the right time to sell, don’t wait too long for the sake of “holding on” to something you’ve created.
Of course, sometimes a sale needs to happen because the market isn’t strong – perhaps your business needs someone with more capital to expand and maximise or needs a fresh approach to continue moving forward. Even if you’re selling under financial duress, try to keep a level head and make the sale process seamless for a new buyer – be honest with yourself about where your business is at.
Look at your business through the lens of the buyer in the current market – if you know there is a downturn in demand for what you offer, make it clear in your sale package that there are opportunities to pivot, grow and expand on your business, but stick to the facts – new buyers will appreciate total transparency versus finding something out later in the due diligence process.
Most importantly, try to sell when you’re in the right headspace to make important decisions and have time to devote to the process. Lean on experts who can handle the legwork portion of the sale to keep you at a healthy distance from the back-and-forth, plan ahead for extenuating circumstances and take care of your mental health during the process.
