Knowing When It’s Time to Sell Your Business
Is it time to put your company up for sale? Whether you’re just assessing the health of the market and your operation or you’re actively looking to make a sale and retire or move on to other ventures, there are a few key considerations to keep in mind. Doug Thorpe shares a few here.
Assess Your Business Health
According to SCORE, it’s important to always understand the health of your business, whether you plan to sell or not. Zeroing in on weak or problematic areas can help you turn your business around, whether that’s to keep moving forward or to prep it for sale. Analyzing your business health can also help you understand if there are problems that can’t be overcome, in which case you may choose to cut your losses with a sale. If the market is good and your business is healthy, but you’re ready to move on, the U.S. Chamber of Commerce says knowing the health of the market and your operation will give you a lot of negotiating power when you list it.
Is The Market Still Viable?
There are a number of economic issues that might point to it being a good time to sell. If your competition is ramping up and you’re competing for the same customers, it could be a wise time to make an exit. If operational costs are rising, but hiking prices would result in a loss of your customer base, that’s another telling sign. How’s your workforce outlook? If you’re in a specialized industry and finding it difficult to recruit new talent, that could be an indication it’s time to move on. Are there competitors that are undercutting you or big-box retailers making it tough to hold your market share? These are all important factors to assess.
Are You Happy?
How you feel personally about your business is a good indicator of whether it’s time to sell. Do you still enjoy the work, or would you rather focus your sights elsewhere? While it takes a great deal of personal time, energy, and effort to build a business when you no longer find the work rewarding, or you’re drawn to something else, it’s wise to consider the validity of keeping the business or selling it. If you’re on the fence, you might consider hiring a manager to run it in your place for a while and see how it feels not being part of the daily grind before making a final decision about selling.
Valuing Your Business
A commercial Real Estate professional can help you assess the value of your business, should you decide it’s time to sell. They’ll need to have an appraiser involved in the process, and they’ll also need to examine your debt and your earning statements for the past several years. They’ll then compare your business to other similar companies for sale and give you an idea about the potential price range you might be able to get.
During this process, be sure to take a look at your business’s credit report. You want to make sure that all obligations for the business are accounted for prior to finding a buyer. Having something sneak up can scuttle a deal.
From there, they can help market your property and find a suitable buyer. If you have standing inventory, equipment, fixtures, and office materials you’d like to sell simultaneously, that could also bring in additional funds.
Managing Final Paperwork, Including Your Annual Report
Once you make the decision to sell, you’ll need to do some paperwork in addition to your sales documents. This includes filing a final business tax return and a final business report. If changes are being made in terms of the company address, name, shares, or membership, you’ll need to include those details in a final report. Failure to file an annual report could lead to getting hit with penalties and fines that could potentially impact starting another business at some point in the future. You can simplify this process by using a formation service that offers an annual report service, which ensures that all the boxes are checked and you stay compliant.
By assessing the health of your business, evaluating the market, and having your final paperwork in order, you’re better able to make a smart decision about whether it’s time to sell. If all goes to plan, a willing buyer is waiting in the wings to take over, and your goals will be met!
Are you a business owner or executive searching for guidance? Contact Doug Thorpe today!
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