9 Reasons for Selling Your Business

Introduction

There are a multitude of reasons why business owners decide to sell their business. Some reasons are purely financial while others are more personal. You might be in a situation where selling your business is a reliable option. There is no single method of selling a company that is best for everyone. Analysing the reason behind selling your business can help you create a solid plan to reach the outcomes desired. Here is a list of the top reasons we see behind selling a business with a couple of tips to help you get started.

Retirement

Probably the most common reason why entrepreneurs sell their business is because they want to retire. You've built up an asset over time and now it is time to work towards the finish line where you can enjoy the fruits of your labor. Fortunately, by selling your business, you can earn some extra money for your retirement plan without affecting the legacy of your company.

Priorities:

Good Offer Price: You have worked very hard to grow your business and a good offer price will help you ensure that you can enjoy your retirement.
Preserving Your Legacy: While this might not be the case for every owner, maybe you want to ensure that the culture and values of your business remain constant in the future. You might take pride over your business and don’t want to see it change drastically due to your retirement.
Sustainability: A business’s success can be attributed to multiple factors, strong positioning, clever concept, high demand, etc. However, one that is not talked about enough is the leadership involved to make all of the important decisions along the way. If you are an important factor in keeping your business afloat, how can you ensure that your company can remain functioning without you?

Tips:

Take Your Time: Creating a solid retirement plan takes time and it is best to prepare your business to be in the right place to sell.
Screen Potential Buyers: If you value the legacy of your business, make sure you select the right buyer that can offer more than a good price. Ask questions like: Why do you want to buy this business? How do you see this business in 5 years time? Are you capable of handling a business of this size? How much experience do you have?
Experiment: If you have not done so before, maybe try seeing how your company can function without you. Try distributing roles equally amongst your management and see which steps need to be taken so that the next owner can remain successful.

General Fatigue

Being an entrepreneur is not for everyone, it is a giant commitment for one to take with a lot of risks involved. Some people thrive under these kinds of conditions while others do not. Furthermore, the opposite might also be the case where the thrill of starting a business slowly disappears as operations are streamlined. Business fatigue can be draining for both your mental and physical health. Prolonged fatigue can also lead to more serious problems such as poor business decisions. Under these circumstances, you may be ready to sell your business and start a new challenge in your life.

Priorities:

Sustainability: What makes your business work? Are you a big aspect of its success? How can you ensure that your business remains successful after you are gone? Buyers will ask these types of questions and more when looking at your company. Through their due diligence work they want to make sure that the business is operational for the deal to be worth it for them.
A Good Offer: You want to make sure that your next step in your career starts the right way. With the right price you will be able to take those future risks with a bit more security.

Tips:

Take your time: While you might be excited to move on from your current business, it is still important to take good care of it so that the business will sell at a reasonable price. Buyers are looking for businesses that can make a good profit right away, so making sure that you are selling at times where the demand of your company’s products or services is high will definitely help.
Tie Up Loose Ends: The last thing you want to happen after finally selling your business is for a forgotten bill or promise to creep back into your life. Buyers want to make sure that they can start operating your business without having to deal with any loose ends. Make sure that your financials are transparent and up to date. See if you can resolve any deals or promises you have made to employees before leaving.

Business Partner Dispute

Disagreements between partners can happen all the time. However, some can be more damaging than others to the point where a business can no longer function properly. Selling the business in this situation makes it easier for the two owners to get their fair share and part ways.

Priorities:

Transparent and Clear Communication: While this might require legal assistance, the most important objective in these kinds of situations is to make sure that both parties are clear in what they are looking for out of the sale. If you and your partner share a 50/50 stake in the business you will still need to cooperate when it comes to selling your business. Creating clear methods of communication will help both of you in the long run.
Good Offer Price: While your business journey might not have lasted as long as expected, it does not mean that you cannot benefit from the work you have done along the way. Having the best offer price possible will ensure security in your future ventures.

Tips:

Clear Financial Records: While you and your partner might have disagreements on certain aspects of your company, there are some factors that can be shown and evaluated objectively. Having good and comprehensive financials can help you create a solid foundation for selling your business. Tresle offers services from Quickbooks to help you display and organize your business’s financial information to sellers.
Consult Experts: Business selling can be difficult especially after a partnership dispute. Consulting experts might help mitigate the risk of underselling or overselling your business. Tresle Plus offers real, personal feedback and support for your business selling needs. We also have a help center to ease your navigation through our website.

Divorce

Selling a business is a likely option when two co-owners are in the process of a divorce. Liquidation of assets allows for an easier separation of the proceeds. While it might be similar to selling a business due to a partner dispute, there are some key differences that are important to notice.

Priorities:

Transparent and Clear Communication: See explanation in “Business Partner Dispute” section
Good Offer Price: See explanation in “Business Partner Dispute” section
Sustainability: Selling a business due to unplanned events can be extremely difficult, one major aspect that might be overlooked is the rate of success after the former owners have left operations. Potential buyers may be skeptical about the ongoing success of your business if they cannot see its ability to function without you.

Tips:

Understanding the Other Party: You are not alone in making the big decisions when selling your business. Your former partner will have a say in every direction this transaction will take moving forward. Therefore, setting goals for both parties will give a better idea of how you will sell the business. You might have disagreements that will interfere with the sale; therefore, solutions acquiring a third party expert will help you ease those decisions.
Planning the Worst Case Scenario: Selling a business can take a lot of time especially when trying to attract buyers. There might be a case where you cannot sell your business at your current asking price. Planning for that scenario can help ease the stress. A common way to sell your business at a faster pace is to lower the asking price. Make sure that the price you are willing to sell at is something you have thought of before.
Try Not to Let Your Emotions Interfere with Selling: Selling a business can be extremely emotional especially if you contributed a lot of time, money and effort in seeing it flourish. Adding a divorce on top of that can make the situation even more stressful. Letting your emotions dictate your selling strategy can lead to irrational decisions that you might regret in the future. Luckily, there are some strategies to help you keep your head high while facing certain important decisions for your business. You can learn about managing your emotions when selling on our blog article.

Health Concerns

A major sickness befalling to either an owner or a close family member is a serious matter that requires a lot of decisions to be made. It is not uncommon for a business owner to decide to sell their business due to a health concern. The timeline in which you want to sell your business can vary depending on the severity of the health issue.

Priorities:

Faster Selling Stage: Time is of the utmost importance when faced with ill health. Recovery and treatments can take up a lot of your time. If you were a key member of your business’s day to day operations, your absence might lead to a decline in its value. Therefore, it is best to sell your business while it is still operating normally so that you can get a solid offer and focus your energy and time on your health.

Tips:

Evaluate your circumstances: Health issues vary in severity and can therefore lead to different paths in selling a business. If you have some time between now and your departure, you can start focusing more on getting a good price by better setting up your business for it to be sold (show more profits, good financial records, etc). However, if the health concern calls for immediate attention, you may have to start thinking of other strategies to sell your business faster.
Don’t be afraid to ask for help: While you might not be able to sell your business yourself, you might have a family member, friend or employee that would be able to help you. You might also want to seek professional help from a broker or business matchmaking company. With Tresle Plus, we offer custom solutions, no upfront retainer, and support from verified, professional advisers.
Worse Case Scenario, Lower Your Price: If time is limited and you want to sell your business as soon as possible, a great way to attract more buyers is to lower your price. Before entering a listing for your business, think about the lowest price you are willing to sell it for. If a couple of weeks or months go by and you have not found any buyers, you can incrementally lower your price until you have either found a sale or you have reached your limit.

Financial Reasons

Finances can get in the way of your operations to the point where it is no longer feasible for you to remain an owner. You might see little to no growth in revenue or profit making your financial situation difficult. Fortunately, selling your business can help leave you in a better financial position especially if you have the time to strategize.

Priorities:

A Good Offer Price: Probably the most important priority in selling your business would be to find the best price possible under your current circumstances.

Tips:

Take Your Time: For you to have the best price possible, you need time to plan, research, and execute a successful listing for your business. If you want a good offer, your business needs to be worth the price. Make sure all of your finances are in check. Do some research on how to improve the due diligence experience for potential buyers. Ensure that your business can function without you. This will take some time but it will definitely be worthwhile.

A business can only grow so much. Maybe you have reached the point where you see no potential increase in profits without taking major risks. You have taken your business as far as you can given your own skill set and connections. In this situation possibly the best case scenario is to sell your business.

Priorities:

Obtaining the Best Offer Price Possible: You have reached the peak of what you can achieve with your business and therefore, deserve to be compensated for your hard work. This is the best time for you to sell your business the highest price possible. Furthermore, unlike in most other circumstances where owners tend to sell, you probably have much more time on your hands to effect a great deal.

Tips:

Take Your Time: For you to have the best price possible, you need time to plan, research, and execute a successful listing for your business. If you want a good offer, your business needs to be worth the price. Make sure all of your finances are in check. Do some research on how to improve the due diligence experience for potential buyers. Ensure that your business can function without you. This will take some time but it can definitely be worth it. Both Tresle and Tresle Plus offer help and solutions for you to get an amazing deal.

Inheritance

Maybe you did not start the business on your own but instead have inherited it from a late family member. After taking the time to consider other options, you have decided that the best way forward is to sell the business.

Priorities:

Understanding the Industry: Since you were given the business posthumously, you might have limited knowledge of the industry itself. Although you are aiming to sell the business, you will still require a basic understanding of the industry for you to make a solid listing and to operate the business during the selling process. Without any knowledge of the business, you might not be able to present it in the best light, lowering your chances of getting a good price.
Preserving Legacy: The family member who gave you the rights to own their business most likely wanted that business to outlive them and remain relevant for as long as possible. They have committed endless hours growing it and you probably do not want to see it fail even if you cannot operate it. Therefore, it might be a priority for you to ensure that the company’s value proposition and culture remain intact after the sale.

Tips:

Do Your Research: There are countless articles on the internet that can help you sell your business in the most convenient way possible. You can also spend some time learning more about the industry you are dealing with.
Ask For Help: While you might not be an expert in the field of your business, you probably have some family members, friends, or close employees that can help you. Furthermore, you might also want to hire a broker or create an account with a business matchmaking website to take away some of the stress of selling. With Tresle Plus, we offer custom solutions with support from verified, professional advisers to help you get the offer you want.
Take Your Time: Selling a business is complex and can take a while to take effect. There are multiple steps to make your company ready to sell; therefore, don’t expect to get immediate resultsThe more you spend time learning about the industry you are in and getting the help you need the better chances you will find qualified buyers.
Screen Potential Buyers: If preserving legacy is important to you, make you sure that you have the time to really know the potential buyers. Why do they want to buy your business? What are their plans for the future? Do you see them being capable of operating a company of this size? All of these questions should be considered when looking for the right buyer.

Relocation

Relocation can have several meanings. The first one is that you have found an opportunity somewhere else that you cannot pass up. The second meaning is that you have decided to move to a new city, state or even out of the country. Either way, it might not be an option to remain the owner of your business under these circumstances.

Priorities:

A Good Offer Price: Even though you have decided to move away from the location of your business, you have still contributed a lot of time, effort and money to the business you own. Finding the best price possible for your labors should be top of mind.
Faster Selling Stage: Under your circumstances, you probably do not have a lot of time between now and your departure. Therefore, it is probably best for you to sell your business in a relatively shorter period of time compared to other sellers.

Tips:

Plan Ahead: The best way to get a good offer price on your business is to organize as much as you can as soon as possible. Furthermore, you can also try and plan different scenarios to be better prepared (selling the business remotely, getting additional help, collaborating with employees, etc). Services like Tresle Plus can offer flexible solutions to fit your selling needs.
Lower Your Initial Price: An effective way to get more offers from potential buyers is to lower your asking price. While it might not be the best solution financially, it can definitely help if you are looking to sell within a shorter period of time.

Conclusion

There are countless ways to go about selling a business. They are all dependent on context and the owner’s priorities. All of the 9 situations we have discussed in this article will require some planning, time and effort in order to get the best results. At Tresle, we offer multiple solutions that can accommodate any of the reasons listed above. If you have any questions on how Tresle can help you sell your business, you can contact us here, call us at 1-888-576-9226, or send us an email at hello@tresle.com.