Sometimes in life, you just have to let it go. You have to let go of anger, regrets, grief, a toxic relationship, a job you hate, anything that is causing you stress and anxiety and affecting your health.
Sometimes you have to let go of your business. And there’s a right way, and a wrong way, of doing that.
Very often you’ll see a business for sale and the reason given is ‘ill health’. You yourself, right now, may be thinking of selling for that very reason. The fact is, it’s not unusual. Making the move from employee to employer is huge. It’s exciting and liberating, but it also brings risks, pressure and a lot of hard work.
When you run your own business, you put your heart and soul into it, as well as a lot of hours and energy. That’s a good thing, and few business owners regret their decision. Depending on the industry you’re in, and the way the business is set-up, it may take you all the way through to retirement. If, however, you don’t see yourself staying the course, for whatever reason, it’s better to sell and move on to the next project.
Sell for a Profit
People sell their businesses for many reasons besides ill health or burn-out. Some people have a five-year plan; they like to buy a business, build it up, sell for a profit and move on to another project.
Some people lose their motivation; others grow their business beyond their own skill-set. Some want to move interstate or overseas; others want to capitalise on their investment.
The secret is knowing when to sell. If you’re selling to raise funds you’re probably right on the ball. But, if you’re selling due to ill health or lack of motivation, the risk is you’ll wait too long before putting your business on the market. If you run your business into the ground, you won’t get the rewards you deserve.
It can be a tough decision to make, but it’s better to make it now and sell whilst the business is still looking good on paper, rather than dissolve it entirely.
Formulate your Exit Strategy
Let’s consider for a minute WHY it’s a tough decision. Let’s face it, you don’t want to do this anymore, but you don’t want to let go either. That’s natural. You’ve put a lot into the business; you may even have put other dreams on hold. You may feel letting go represents failure; it doesn’t. far from it, it is proof of a smart business brain making a sensible financial decision.
The first step is to formulate your Exit Strategy. By all means, discuss your decision with family and friends; it’s a good way of confirming you’re doing the right thing. You should talk to your accountant and solicitor, too.
Find out what you need to do to make the sale go as smoothly as possible. Are there debts outstanding that need to be settled before the sale? Are there permits or licenses to transfer? What do you need to do for your employees? Will they wish to stay on with the business?
There are documents you need to prepare, such as a Profit and Loss Statement, Balance Sheet, Tax Returns and Inventory. You also need to gather other important documents, such as Lease Agreements (including any equipment, machinery or vehicles), Franchise Agreements, Supplier Contracts, Domain Registration and website hosting, Employee Agreements and so on.
Help is Available
It sounds like a lot but there are people and organisations to help you with all of this.
There may also need to prepare your business in other ways, such as giving the building a coat of paint or making any repairs. Do whatever you need to do to make your business attractive in every way to potential buyers.
When everything is ready for sale you need to get a valuation so that you can price your business correctly. The businesses that sit on the market for a long time are usually the ones that are over-priced.
If you do all the preparation work, and correctly value your business, it will sell.
When the right buyer comes along, it will be a happy day. Not only will you feel the relief of selling, and the excitement of moving on to your next adventure in life, but you will also be proud of the fact that you created a successful business that will continue into the future.
Zoran Sarabaca is the principal of Xcllusive Business Sales
Disclaimer: Chan & Naylor takes no responsibility for the accuracy of any research material of contributors to our newsletter. Contributions to our newsletter such as this “Is Your Business Bad for Your Health? And other reasons to sell now!” post are meant to be educational only, and Chan & Naylor does not endorse any promotional material promoted in their articles. Readers should do their own research to determine the accuracy of their material.