We get asked this question often: ‘when is the best time to sell a business?’ And though the answer is simple, it is a difficult thing for people to accept and run with. Why is that? Good old fashioned human emotions! Here’s the thing, even though businesses may all be different in their makeup, the people running them are all the same. So are the people that buy a business. People are and always will be the same. From this, you may be able to figure out the answer to the question. Before I give you the answer, here’s a clue: If you were buying a business, what would you want? Think about it a minute. You would want a well-run, well-oiled money machine, right? And, if you had that, would you want to get rid of it? Probably not, if you were in good health and had time to run it and keep it cranking out dollars, right? So are you beginning to see the answer to: “when is the best time to sell a business?”
The short answer is: when the business is doing really well. Do you see the dilemma? When things are going well, the seller doesn’t want to let go. In fact, they usually are not even thinking about selling right then. Yet, it’s right then that the business has the most appeal and will draw the highest bid from buyers. That is when the business presents the highest value both to the seller and the buyer.
Many times business owners only begin to think about selling when things turn downward. When things are going well, selling is the furthest thing from their minds. As entrepreneurs though, they are usually very positive and believe they can turn around any slumps, so they hang in there. But, if it doesn’t turn and keeps heading south, the urge to sell grows stronger and stronger. Eventually, when they finally admit to themselves that they are not the one to do it, it’s too late. By then, it is not the best time to sell a business. The value will be low.
Buyers are not usually interested in taking on a problem child. I say ‘usually’ because there are exceptions. There are buyers who look for under-rated operations. But most of the time, buyers are people who are looking for a return on the investment of the business purchased. They are looking for an investment with high value.
The best thing a business owner can do is to adopt a long term view; that is, adopt a perspective of: one day I will sell this business and until that day gets here I will continuously improve things. Then, when the day comes that, things are clicking along and the best ever, that is the best time to sell a business!
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