Some small business owners know exactly how they are going to exit their businesses and have it all planned out since the very beginning. For others, though, things aren’t so straightforward. Eight out of ten small to mid-sized business owners don’t have a transition plan, making it difficult to tell when it’s time to step back and let someone else take over.
Here are three signs you’re ready to sell your business, even though you might not realize it yet.
1. You’re losing interest in the day-to-day operations.
Running a business is hard work, and it consumes a lot of your time. A quarter of business owners work more than 50 hours a week; a third work more than 60. Putting in this amount of time over the years is exhausting, and it can quickly lead to burnout. Post-COVID, 42 percent of business owners report feeling burned out.
When you are passionate about what you do, working 50 or 60 hours a week might not bother you. You can put in those hours year after year and not even think about it. But one day, something changes, and you realize you’re not enjoying it as much. You start to feel every hour. When you reach that point, it might be time to seriously consider selling.
2. Your business plan has reached a critical point.
Your business might have reached a point where you have a big decision to make. Sometimes, this might be a big advancement, maybe you developed some technology that can revolutionize your business, got a sudden influx of customers, or came up with a new product that reinvigorates you and your company.
On the other hand, a critical point may be a downturn in the economy or an unexpected global pandemic that makes everything feel uncertain and unstable.
Either of these situations is a good time to sell. If you’re worried about the viability of the business or you know you don’t have the resources, time, or desire to work through a downturn, it might be time to sell to the highest bidder.
If you’re not sure what comes after a period of sudden growth and you aren’t sure if you want to spend your time building the business beyond that, you should seriously consider any good offers you get. When your business is on the verge of exploding and you want to get out, there’s a small window where you might get a much better price than you’d imagined.
3. You get an offer that you know you can’t refuse.
You might be planning to stay in business for another decade or more, but if someone approaches you with an offer to buy you out and it’s more than you ever anticipated getting, you should seriously consider accepting.
Sit down and figure out if the deal you can get today can give you the financial support you need after selling. You should also consider how volatile the economy is as you might end up better off if you sell early.
If you’re willing to sell but not quite ready to retire, see if you can work out a deal that allows you to stick around as an employee for another year or two during the transition period to bridge the gap. It keeps you busy, lets you continue to earn money and potentially benefits, and helps the new owner adjust.
Just because you sell your business does not mean you have to retire. If you lose your passion, take some time to figure out what you need to do to get it back. Selling your business is a good way to get some financial security while working out what you’re going to do next.
Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.