Running a business can be rewarding at times and also very exhausting at other times. Especially if you’ve been doing it for several years, it can sometimes be difficult to find the energy to keep your business growing. “I’m burned out!” is a common phrase I hear from business owners when discussing the possible sale of their business.
For many owners the reason to sell may be simply they want to retire and enjoy life without the ongoing stress of running a business. A real risk at this point in the process is that when they’ve made the mental leap to retirement that then their physical efforts usually follow. Thinking about retirement? Don’t get so far gone that you can’t give it one more big push. During the selling process, you must keep the pedal to the metal!
Typically when we value a business (as do buyers), we consider the last three tax returns/P&Ls and the current year-to-date numbers. Businesses that get top dollar from a buyer have steady or increasing returns over that time period. Can we sell a business that fluctuates a bit or falls off over the previous few months? Yes, but only if there is a good reason for that fluctuation; buyers will ask for an explanation.
Buyers are naturally a little skeptical about why a business owner would want to sell a perfectly good business that’s turning an excellent profit. When they see erratic numbers or a decline over time, they get worried and may walk away. They want to buy something that is solid and growing rather than risk inheriting someone else’s problems. After all, they think, you know your business better than anyone and if you can’t make it work, then how can they?
Here are some things to keep in mind when you’re thinking about selling:
- Continue to invest in marketing/advertising – keep revenue growing.
- Make sure all your key positions are filled and are compensated appropriately.
- If your business is large enough, delegate some of your duties to your key staff where it makes sense.
- Don’t back off on your time – especially if you’re an owner/operator.
- Stay current – positioning the business for the future will set a buyer up for success.
When you make the decision to sell, it’s more important than ever to keep your foot on the gas and avoid coasting.