When Is The Right Time To Sell?
You’ve determined your business has transferable value, you’re going to capitalize on that later, but let’s talk timeline. You want to plan ahead to sell so you are selling at the right time.
When’s the right time?
When you need the money, right? Wrong. The right time to sell is when your business has had its two best quarters ever. That is the moment when you achieve the peak value.
Basically, you should sell right at the point when you ask yourself, “Why am I selling, again?”
It’s kind of like fixing up a house to sell. When your house changes hands, it’ll probably look better than it ever did when you lived there. It should be the same for your business.
The Selling Curve image shows a typical business life cycle. When businesses first start up, sweat equity and hard work is what’s needed to get traction. This is the phase when the business is getting established and laying the foundations for future growth.
It’s so tough that many people quit or think about quitting at this point. The owners may want to sell the business, but they haven’t put in enough sweat equity to build any real transferable value.
The next phase is the growth phase.
Ever heard the term growing pains? It applies here! The hard work is paying off, but the business is learning by trial and error. At some point, things really get going. Systems and procedures are in place, the management is working together like a team, and employees are experienced enough to get things done with little managing. The business is working like a well-oiled machine.
You can see this point on the graph—it’s the peak! And that’s exactly when your business is poised to sell. The buyer can then maintain the existing mature business or put in another round of hard work to grow or evolve the business to new heights.
What you don’t want to do is be ROJ—that’s retired on the job.
Don’t wait until you’re sick and tired of working, your customers have left for your hotshot young competitor, and you’ve already bought tickets to someplace with a gold course!
This is exactly why you need clarity now, when you can plan months or years ahead for your sale, so you can get the books and business in order and deliver a company at peak performance to the marketplace.
Your reasons are your own, but it’s important to be clear with yourself about why you’re selling. Whether you have personal or financial considerations, having clarity on why you’re selling will help you keep your eye on the goal of a smooth exit transaction.
You have worked hard to build your business and make it what it is today. It is essential to seek professional advice and support to maximize your return when you sell your business.
Author - Joe Griffith
I've been consulting with clients since the 90's in various capacities. We have a saying in this industry – "You can't read the label from inside your own jar." And this is why we need to turn to someone outside of our business that has a fresh perspective and new insight. You simply can't do this for yourself. I am able to give you that perspective and a system that will deliver the results you really want.