You’ve just come into my office, sat down, and have received a cup of coffee. We’re talking about your business and you drop a bombshell: You tell me you’ve decided to sell your business.
This is not an unusual situation in my world. I often have owners come in and say they’re ready to throw in the towel. If you want to start this conversation with me, here’s what I’m going to ask you:
What’s changed that you want to sell your business? Almost every time when an owner tells me they want to sell it’s because something has changed. The change is rarely a positive one. Sometimes the change does signal its time to sell. More often the change signals that before you sell, you better fix the problem that’s making you want to sell.
Why do you think this is a good time to sell? Almost everyone has a highly emotional experience when they sell their business. Eventually we’ll get around to what you’re going to tell the world, but I want to know what you’re telling yourself. If you’ve decided to sell your business because of emotional reasons it’s likely the wrong time to sell.
The right time to sell is when you’ve made a slow decision. The right time to sell is when your business has had a couple of years with increasing sales and profits. If business takes a dip, I can promise you that this is not the right time to sell.
After you’ve sold, how do you plan to spend your time? Jack Beauregard from the Successful Transition Planning Institute calls this your second act. Having some idea about what second act means for you and how this manifest itself in your life is an important issue. You can be sure that we’re going to spend a lot of time talking about this issue.
Are you financially ready to leave your business? The first thing I want you to figure out is how salable your business is. Just because you want to sell your business, it doesn’t mean there is someone waiting in the wings to buy it. This is especially true if your business has just had some sort of setback.
I’m a big believer that doing a financial plan before you sell your business is important. You’ll want to know whether you’re in a position to ride off into the sunset, or if you’ll have to continue working after you sell your business. Most businesses I see require the owner to do something to continue creating revenue to live on after they sell. When you as an owner learn this, you might decide it’s not the best time to sell after all.
Is your business ready for sale? The big question here is how involved as an owner are you in day-to-day operations. I can tell you that unless you’ve spent a lot of time teaching others to run your business you’re business becomes harder to sell. I believe and think you should too that your number one task to get your business ready for sale is to make yourself operationally irrelevant in your business.
The next question I ask is what is special about your business. Selling a me too business is a difficult affair. If your business has special processes or creates customers in an interesting way that is repeatable, your business has just become much more salable.
The “I want to sell my business” conversation often goes for several hours. As with almost all of the conversations I have I’m really interested in answering the question why. In this particular case there are multiple whys and it takes a while to work through all of them.
Have you thought about the whys you’ll need to ask when it comes time to leave your business? If not, why not? You will leave someday and doing so in an intelligent manner will make a lot more sense than just waking up one day with an overwhelming need to get out.
We’ve put together a salability report. This report will help you see how salable your business is and how it looks to an outsider. To get this report, click on the button below.