As half of all businesses fail within the first five years, if you’ve made it past that mark, it means you’ve got a great concept. If you’re hitting it and on the decline, it might be time to make a hard decision. Selling a business is never easy, especially one that you love, but sometimes it’s the reality.
Here’s what you should be considering when selling a business.
Are You Still in Love?
Most people start a business because they have an uncontrollable passion for what they do. they want to be successful but they also want to be happy and see their work as the way to do it. Just like a marriage, once the passion fades, it’s hard to keep things exciting.
If you wake up every day exhausted by your own business, it might be time to give it up. A startup shouldn’t be a “startup” ten years in. That’s when things are challenging, frustrating, and maybe taking too much work to keep afloat.
That’s a good sign it might be time to sell.
Your energy could be better spent building a new business or moving on to something else than keeping this one business growing. You should be excited because that can tell you how much of an impact your work is having on the planet. When you’re tired, you’re more likely to see your work as a chore.
Personal time, family time, and doing the things you love are important to any entrepreneur. They’re important to any person. If you can’t get yourself excited about your business, it’s time to find yourself a CEO to replace you or to sell the business outright.
What’s the Business Model?
Some business owners will operate a startup or business for years without a proper model, at some point, they need to grow to the next stage. You need to have a viable business model in order to reach beyond that original period of excitement about your business.
Attracting customers is exciting but you need to keep them and keep serving them for years. Even with a good model, you need to make sure that you’re okay with that model.
Building a business with an aggressive sales model is ideal for some people. Others like to let customers come to them, if they can afford that, and then massage each customer.
Some CEOs like to micromanage and have their hands in everything. Others want to work on making investors happy and let their team do the rest. If you hate every minute of the model that your business is currently operating in, you’re not going to do well.
In fact, even if you’re doing well, your morale can tank the whole project. If you’re doing something right but it would take a lot of effort to get to the next level, consider a merger or selling. If you can merge into another company, you can sell your business for a great profit while allowing other people to take your concept to the next level.
If you’re sitting on a great location, you might want to have the new team move in. If that’s not feasible, consider an MLS service so that you can make the most from every aspect of your business.
Maybe It’s Your Team
If you’ve got a strong concept, having the right team will determine your success in executing it. You need to have enough money to pay them or else you’re going to be stuck struggling with smart and hard-working people who just can’t do the work.
Get some talented and experienced people on your team and have them help you build a plan and an economic model. If you’ve accomplished a lot to this point, they should be able to come up with something. Using their own success and experiences, they could help you grown.
However, if you’ve already taken a lot of money from your investors, you might be at the end of your rope. Some projects build enough proof to show that they’re not worth continued investment. Taking out more loans or getting more money for investors could end up tanking the profits you’ve made.
Much of the investment that CEOs are making in businesses right now is going into IT and tech. That makes the concept of investing further into a business very daunting for some business owners. It might not be in the cards to spend half a million dollars to build out a tech department.
While there are more and more services that help you get tech help a la carte, that can bring its own frustrations. Try outsourcing to managed business services if what’s really missing is the staff.
Can You Attract a Buyer?
That’s the ultimate question. If you can’t get a buyer, you might have to come up with other plans.
Letting your competition know that you’re for sale brings pros and cons. On the pro side, they might want to invest the money into buying your business and save the legwork of competing with you. On the con side, they might just outspend you and crush you into oblivion.
If you have a business development team, get them on the case. Have them set up informational and informal meetings to show people that you’re for sale. Just make sure that everyone signs an NDA to keep the word from becoming toxic.
Selling a Business Is a Tough Call
There’s no right answer for when it’s time to sell a business. Selling a business is as personal of a decision as starting one. However, it’s important to make a decision before things take a turn for the worse.
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