The time to sell is when someone wants to buy! When we brokers talk among ourselves this is always a hot topic. You see for a Business Broker we are always on the hunt for new listings. For a broker having listings is like having inventory. Without it, there is nothing to sell. I jokingly tell people that two days a week everyone wants to sell. You just need to ask on the right day. When it’s raining for instance I know to call on landscapers and house painters. For a business owner the decision of when to sell often presents itself in the way of forced life changes or business environment changes. This article will make the assumption that business is good and the idea just popped into your head.
“The time to sell is when someone wants to buy.” That is what I was always taught, and it makes a lot of sense in some cases. The answer lies in control of timing. We have none. Just as you can be sure that employees won’t come in on a busy Monday morning…you can be sure that when you want or need to sell quickly the buyers will be hard to come by. A bird in the hand is better than two in the bush here too. By the way, all those customers that have told you to call them when you wanted to sell will disappear and soon as you have the nerve to want real money for your business.
The question that you must answer before you even think about selling your business is: What am I going to do with myself? A person needs an exit strategy. The only people that regretted selling are those who gave no thought to the day after the sale. I’m not saying that retirement is not a good option but even then you need an idea of what you are going to do on that retirement.
This is so important that we have to talk further on this subject. Selling your business is gut wrenching!! Especially if it is a business that you started on paper in the bathroom 25 years ago and built it from scratch. It’s more than a place to go to work, it’s a friend, a constant, for some of us it’s the reason we wake up in the morning. We have our employees and customers and our way of doing things. The new guy or gal will have new customers and new ways of doing things and, God forbid…they may be better. What if they are more successful than me? It is a very strong person that truly wants the new guy to do better. We define ourselves by our business and if it succeeds then we are successful. If it fails we would take it very personally. The joys of knowing that your strength and independence will in some ways be gone if you sell without a plan for the future. Your longtime vendors won’t call to talk to you anymore. You’ll be just like the rest of us regular “Joes” if you sell without a plan for the future. You must be running toward something not just away from something.
Money obviously is a big concern and the seller should be aware of the expense of the sale. It is rare for a small business to be bought for an all cash deal. For most small businesses the buyer and the lending institution will expect the seller to “hold a note” for part of the payment. This isn’t necessarily a cost but you won’t have use of that money the day after the sale. Also there is a thing called taxes that seems to come between your money and your wallet. There is also lawyer fees and accounting due diligence stuff that will add a few thousand to the bill. Brokers like me usually have a commission fee of 10% of the total sale price.
I know what you’re thinking…all this reading and still I don’t know if I should sell or not. Well it should be a hard question. This is after all a change of life and all. Eventually we all do the same thing. The romantic idea of selling is over, and we have time to think about it. Kind of like the fantasy we all have about just running off to live in another place and starting life over with no responsibilities. (I know you have had that dream at least once.) You will treat this just like any other business decision and weigh the pros and cons of the deal. Remember the goal of any business is eventually to sell so you can reap the benefits that the money will bring, and that if your business isn’t giving you more life…it is taking it away. With all that said…the time to sell is when someone wants to buy.