A person who owns a business might eventually decide to sell it. This is seldom in the startup phase. But only once a business is running well. When it has a recognized name, and it has an ongoing customer base. A business can often be sold at any time if it has ongoing returns, but finding the best time to do it is a challenge. The owner should seriously ask himself, “When is the Right Time to Sell My Business?”
Should one sell their business?
The first answer is whenever you want, and the second answer is whenever it is most profitable to do so. Most people who start a business from scratch are highly attached to it. It is good to work at this business for as long as it provides satisfying work and good income. Whenever the owner gets ready to retire or to move onto another project, it must be decided what to do with the storefront.
One option is to keep the store but to hire a new manager. There is nothing unusual about this because many businesses are owned by entrepreneurs who invest in franchise restaurants and small stores and let other people run them. Thus, offloading direct management to someone else is a viable option, but it does mean still having to pay some attention to it as well as be financially liable for the business.
How to gain more profit?
Profitability includes everything that affects the value of the storefront. If it is a brick and mortar store and not just a brand and intellectual property, then the storefront itself has value. The land is valuable, and the building on the land is valuable. If the building is in good condition and the property market is up, then selling at that time is great.
What to keep in mind?
Buildings also deteriorate over time. If the business owner waits around for too long, then the building and its utilities might start to suffer. Buildings need maintenance, and any pipes and wires used in it will eventually need servicing. Repairing the roof and patching holes are also major expenses. A lesser expense is the age and continued viability of the security system. Selling before it becomes necessary to pay for renovation is a great idea.
To that end, it pays to talk to real estate agents or business brokers about the sales price of a building. An appraiser can give detailed information about what probably needs to be fixed. Keeping tabs on this will make sure that more customers will accept the building without demanding something gets fixed. The more customers that are interested in a business based on its building, the higher the property will sell in a competitive bid.
What does the profitability depend on?
Aside from keeping up a building and its utilities, the profitability of a business depends heavily on its current customer flow. All sizeable businesses keep bookkeeping ledgers, and the contents of these spreadsheets can help persuade potential investors to offer more upfront. To that end, it pays to invest in the business before selling. This means attracting more customers and not allowing existing profits to fall.
When a shop owner gets close to retirement, there is the temptation to slow down and start taking it easy. This is a mistake because it could reduce the amount of business in those final years. A shop should remain in good shape and as busy as possible right up to the time of sale. This is just because a declining business is an unattractive purchase.
Most personally-owned businesses are branded by their owners as much as the name and the merchandise. The store owner is seen as the life of the business, and a decline in personal activity might reduce customers. Hiring an additional employee might keep things working energetically. As long as the customer base is consistent or growing, the business looks like a healthy prospect and attract good money.
How much time does it take?
It usually takes half a year at least to sell a business. This is because it takes time to attract buyers and to go through the whole process. A lot can happen in a year. There could be a dip in the investment or real estate market, and that could affect the sales price. To that end, it pays to wait until near the peak of a market cycle, during which time most assets are inflated. Then it’s the right time to sell your business.
If the market can be played, or if a recession does pass through while the price is being negotiated, it still might be the right time to sell based on personal needs. Try to get a good deal, but accept that dips in the overall market take a long time to climb back up. Also, remember that if the business has stock, then it might be possible for the former owner to still keep a piece of the action. Hope now you know the Right Time to Sell your Business.