When is the right time to sell a business?

The article concerns an interesting question – When is the right time to sell a business? This is a question I have pondered over for a number of years due to lack of enjoyment with my current business. This is a very difficult decision for anyone especially for someone who has built a business from the ground up. My business is doing well and brings in a nice yearly wage. So why do I feel that selling it and starting from scratch is the best decision for me?

When is the right time to sell a business

I know I am mad right! However here is my reasoning, the hours are long, I only have 10 days off a year and I feel I have other business ideas unexplored which I would like to put in practice. I would love to be one of those people who can juggle multiple businesses but I learnt early on when playing with new ideas I could only ever do one thing properly at one time. When I concentrated on one business idea then I would get better results.

I always had the plan to sell my shares at one time or another and when reading Common Sense Rules: What you really need to know about business by UK entrepreneur Deborah Meaden. Deborah was in a very similar situation to me in a retail business with a partner as her first main business. She sold this and moved on to bigger and more lucrative businesses. This confirmed my ideas of eventually moving on could be achieved.

Strategically speaking selling a business at its most profitable will mean the value is much higher. Roughly business math suggests that the value of a business is four times the profit for the year but a business is only worth what someone is willing to pay for it or what your willing to accept. Please note you can not bump profit figures by taking no or small wages. This will be taken into consideration when multiplying profit.

Sentimental value and pride is the biggest issue when selling a business especially a family business or a business built from scratch. Timpson is great example of this. Known as one of the big UK chains for key cutting a shoe repairs they have been trading through 5 generations of Timpsons. They have no plan to ever sell but only pass to the next generation of Timpson.

Selling a business when it is not doing well is a tricky situation. Most buyers will be looking for potential when acquiring a business if this can not be seen then you are unlikely to find a buyer. The value will also be dramatically decreased and if you believe this is just a downturn then it is recommended you work through until better figures are achieved.

Businesses are only as good as the people that run them. The people who run them decide when they expand, trade, develop. This is the same situation when selling. Only the person behind the business can decide when the time is right. While I know it will be my time to sell my business soon I have not quite reached my final decision to sell just yet.

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