Knowing When It’s Time to Sell the Business
March 29, 2023
Selling your business is a big decision. It can be both exciting and daunting as you are likely to have invested a great deal of time and money into it. There are many reasons why someone might choose to sell their business, ranging from market changes to personal health issues.
If you are thinking of selling your business, our attorneys at DeChello Law Firm LLC can help. Our business law attorneys in North Haven, Connecticut, can explain when to sell and when not to sell your business. We also represent business owners throughout New Haven County.
Reasons to Sell Your Business
Let’s discuss some of the most common reasons why someone might decide to sell their business:
The market has changed. The market can be unpredictable, and what may have been successful when you first opened your business may no longer be relevant or profitable. If the market has shifted significantly since the inception of your business, it may be time to consider selling your business and taking advantage of new opportunities that better match up with the current market trends.
Lack of finances. Another common reason for selling a business is due to lack of finances. A decrease in revenue or an increase in expenses can cause cash flow problems for any business. If you find yourself in a situation where you are unable to continue financing your business effectively, it may be wise to consider selling it before it becomes too difficult to make ends meet.
Health issues. Health issues can also affect whether you should consider selling your business. If your health has deteriorated significantly or if you need more time away from work due to medical matters, then selling your business could provide you with much-needed rest and relief without having to worry about running the day-to-day operations of the company.
Retirement. If retirement is on the horizon, then selling your business could provide you with additional financial security during those years after leaving the workforce. Selling now would give you the opportunity to enjoy retirement without worrying about managing the day-to-day operations of a company at an advanced age.
Personal reasons. Finally, there may simply come a point where you decide that owning a particular type of company isn’t for you anymore—for whatever reason—and that it is best for you if the company is sold off instead. At this point, making such a decision would depend on how comfortable you feel with continuing forward and what other options are available.
Despite the potential benefits associated with selling one’s own business, the process can still be quite intimidating and stressful because there are numerous factors that should be considered.
When to Sell
If you own a business, there may come a time when you wonder, “When is the right time to sell my business?” While everyone’s situation is different, it might be a wise decision to sell your business when any of the following is true:
You Have a Solid Plan
If you have been thinking about selling your business for some time now, chances are you have already formed a plan of action. It’s important to have a solid plan in place before you even start considering selling your business. This plan should include what you want to do after the sale of the business, how much money you want from the sale, and how long you expect it to take before it’s sold. The more detailed and researched your plan is, the better prepared you will be when it comes time to actually sell.
You Have Outgrown Your Business
Maybe your business has outgrown its current space or maybe it has become too expensive or complicated for one person or small team to manage. In any case, if you feel like your business has reached its peak potential and isn’t growing anymore, then it may be time to think seriously about selling so that someone else can take over and continue growing the company.
You Have Other Opportunities
Perhaps there are other opportunities on the horizon that are more appealing than running an existing business. Whether you are looking for something new in terms of career direction or simply wish to pursue other interests outside of running your own business, now could be a good time to consider selling. You can use the proceeds from the sale of your business as capital for investing in other opportunities or taking on new projects.
Selling Seems Like the Best Option
Last but not least, if after evaluating all other options (including staying put), selling seems like the best option for both personal and financial reasons, then go ahead and take that route. With thorough research and preparation in advance of making any decisions related to selling your business, you will be well-equipped with all of the necessary information needed to proceed with the sale.
When Not to Sell
Here are three reasons when it might be best to postpone selling your business:
You Love Your Business
If you have a strong emotional connection with your business, you may want to consider postponing selling until the timing is better. You may even find that despite the financial benefits of selling, you won’t feel satisfied if you don’t feel like the timing is right. It can be hard to let go of something that has been such an integral part of your life for so long. It is critical to make sure that if you do decide to sell, it’s for all the right reasons.
The Market Is in a Downturn
Timing is everything when it comes to selling a business, and if the current market climate isn't favorable, you may want to wait until conditions improve before selling. The economic climate can have a major impact on how much buyers are willing to pay for your business – especially if they think its value will increase over time as conditions improve. Waiting until market conditions are more favorable could mean more money in your pocket when it comes time for closing.
You Feel Like It’s the Wrong Time to Sell
It's okay not to feel 100% ready or comfortable with putting your business up for sale just yet. Take some time and make sure that this is what you want and that you are comfortable with going through with this decision. Do not let external factors like pressure from family members or peers force you into making decisions before you are ready.
Get the Support of an Attorney
Deciding whether it’s time to sell your business can be difficult – especially if you have worked hard to build your company from scratch. Get the support of our attorneys at DeChello Law Firm LLC to discuss whether it’s time to sell your business. Reach out to our office to set up an appointment.