When you’re selling your business, timing can be a difficult thing to get right. It’s important to remember that there’s no perfect time to sell. Many owners make the mistake of waiting too long to sell, either because they’re waiting for ideal market conditions or wanting to earn just a little bit more profit first. Unfortunately, this thinking is risky, as it could mean you miss your window altogether.
Waiting Until You Have to Sell
The first mistake to avoid is waiting until you have to sell. Often, owners wait to sell because they’re looking for a little more profit or a few more clients; when they realise these won’t materialise, they try to sell a business that is shrinking. If profits are declining when you decide it’s time to get out, the business’s value will be lower. After all, if you no longer want the business because it’s not making enough, why would anyone want to buy it?
The easiest way to avoid waiting too long to sell is to know your exit plan when you start your business. If you ever plan on selling, decide at the beginning what sort of profits you want to have before you sell, and how many years you want to be in the business. This can give you a good guide as to the right time for you to sell, easing some of your indecision.
The Best Market for Selling
There are some market conditions that make for a great business-selling environment. You’re looking for a strong and confident economy that makes people want to acquire businesses. It’s also important that banking conditions are right, so funding is available for people going into business.
Conversely, a recession or downturn in the economy can harm the value of your business. In a market in which banks aren’t lending money for business ventures or interest rates are high, it can be hard to sell your business at all.
If you’re planning on selling, pay attention to these factors. You want to be able to jump into the market if conditions are good, or delay and hold on to the business if the market is on a downward slope. If you’ve planned your exit strategy at the start, you’ll be better able to adjust your plans based on the prevailing market.
What if Conditions Aren’t Great?
It may be that you must sell, but the conditions aren’t great. Your business may not be healthy, or it could be your own health that is a concern, creating a need to sell during a market slump. All is not lost. You can still find buyers if you know where to look. You may not get the price you would in a better selling environment, but if you take steps to maximise the value of your business, you can still do well.
Speaking to a Broker
A LINK business broker can help you get the timing right. Brokers pay attention to the market, both on a macro level and in different industries, and can advise you whether it’s a good time to sell. If you’re in a must-sell situation, contact a LINK broker and we can help you find a buyer and negotiate good terms despite the negative conditions.
When you’re timing the sale of your business, not every factor is in your control. A new technology could emerge that makes your product obsolete two days after you start advertising your business. But choosing a time when both your business and the market are healthy can help maximise the return you receive from the sale. Remember that you always want to leave on a high; it’s better to sell when your business has a healthy profit but has the potential for more, than to wait too long and try to sell it when conditions and profits are declining. Reaching out to a broker can help you identify that right time.
For further information, contact your nearest LINK Business Broking Office.