When is the Right Time to Sell Your Business?

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When is the Right Time to Sell Your Business?

Working with small business owners for over 30 years, we have learned a thing or two about what makes for best practices.  A lingering question, especially in times of recession, is When is the Right Time to Sell Your Business?  Watch this short video….

If you want to learn more about learning your company’s current value, check out this link…..Value Builder Score

Business Owners are asking questions about business strategies.  Here are some helpful tips to think about when discovering solutions.

  1. When is the right time to sell your business with a looming recession?
    1. Strategy is a Key Factor in answering this question.  Ensuring you are working with an Advisor who can explain the education behind this decision is also key.  At Fortress, our hands-on Market Research expert watches these trends daily, weekly, monthly, and annually to anticipate the impacts on buying and selling during stressful times. You won’t find this with other financial advisors. 
  2. Is the number you believe you can sell your business for, correct?
    1. Have you recently done an Independent Valuation? If the answer is no, then this is where you start.  Working with an advisor’s perspective on your numbers from an outside view helps the business owner see things from a buyer’s perspective.  We all want to see the best in all the things we have accomplished as small business owners.  Valuation takes the emotion out of finding the true value of your business when it comes to selling.
  3. Should you hurry up and sell or take your chances?
    1. The answer to this question will depend on a few things.  What industry you are in, how attractive your business is right now, the sale would yield the money you need to retire, and the age of the owner are all common factors to consider, although they are not the only ones.
  4. Is your team ready for you to sell?
    1. Not because you asked them, but because you have to look at the sustainability of your business if you’re not the person running it.  Would key employees quit not knowing their fate? Would they want to work for a new owner? Would it taint their view of you as an owner if you choose to work towards building value with employees as part of your exit strategy?  They now know they won’t be working towards their career goal but working towards your exit goals as an owner. This could jeopardize the trust of a new owner willing to buy your business.  It is often best practice to speak to your advisor and exit team before letting the cat out of the bag to your employees when thinking, preparing, or going through the steps of Exit Planning.  
  5. What are buyers looking for when scoping out the competition?
    1.  It’s no surprise they would be looking for a deal.  When is the best time to buy a business? In a recession. When is the best time to buy real estate? In a recession.  The goal of the buyer is to pick apart your business looking for financial and operational flaws.  Flaws can save them money because there is a kink in the armor that could be risky.  Looking at these areas from a planning scenario allows optimal preparation to be done in case you must sell in a risker market.  You would want to get the most out of what you have spent your time and energy building as your biggest investment.  On the flip side, building value in your business while the market recovers will be more attractive to you as a seller.  There are many opportunities that can be customized to fit your individual business and personal needs.    
  6. Is spreading the word about selling your business the best way to find that attractive buyer?
    1. As an Advisory team, we strongly recommend avoiding this type of strategy when looking to sell.  There are hidden problems that arise when you start down this path and realize you can’t go back and start over.  Once you get the “word” out you have made an official announcement to the commercial industry that you may not be prepared for.  Some potential downfalls are informing your competitors (who could be potential buyers).  This can create assumptions on the other side of why you may be selling.  Is there something wrong with your business?  Are you desperate?  Why now?  This also brings up assumptions from your vendors that may be worried about their long-term relationship with your business.  The best way to plan is just to do that, plan.  When you have a team planning with you we ask all these questions as hypotheticals and plan accordingly with your best interest in mind.  Not theirs.