A business owner is often faced with difficult decisions when trying to sell a profitable business. There are many reasons someone might decide to sell. It can impact how fast you sell your business and how long you give a new owner.
Potential buyers and Business Brokers need to know the reason(s) behind a seller selling their business. This article will discuss the Top 10 Reasons Business Owners Sell Their Business and how it can impact the sale.
1. Reasons Business Owners Sell Their Business: Preparing for Retirement
Preparing for retirement is the number one reason that profitable businesses are sold according the IBBA. The company may be passed to a relative, but many times the relatives don’t have the skills or interest necessary to run it. If this is the case, it’s time to speak with a Business Broker to determine a selling price and a strategy to sell the company. A Business Broker will learn more about you and your goals and the reasons why business owners sell their business.
Many business owners decide to sell their businesses and want to retire as soon as possible. Others like the idea that they can transition into retirement. A professional business broker will help you find potential buyers who are willing to work part-time and full-time while the seller transitions. Business Brokers can help you maximize the sale price and give you options.
2. Reasons Business Owners Sell Their Business: The Company Is Not Profitable
Another reasons why business owners sell their business is when an owner is not making profit, Sellers decide to sell to avoid going out of business and losing their asset value. Plenty of buyers seek asset sales to acquire the company’s hard assets, lease and other elements of value which can be purchased for pennies on the dollar. With new management, rebranding and motivation, an ailing business can be reborn and profitable.
3. Reasons Business Owners Sell Their Business: The Owner Wants To Relocate
Relocation can be another reason why business owners sell their business. Many business owners are looking forward to the day when they can sell their business and relocate to a more favorable location. Relocation can also be necessary due to a family emergency or another business opportunity.
Relocation can affect the selling timeframe and the transition period that the seller provides to the new owner. It is important to let the buyer know if there are any time limits. This will affect the price of a company and whether it is possible to find buyers who are willing to accept a short or distant transition period.
4. Reasons Business Owners Sell Their Business: The Business Owner Is Experiencing BURN OUT
Burnout is another reason why business owners sell their business.
There are many types of burnout. However, burnout is when you get tired of doing what you do. If you’re not ready to quit your business, you can still try out different types of work and functions within the company before you decide to sell it. If you have tried different functions within the company but are still tired of what you do, it may be time to sell your company.
A confidential consultation offered by Business Brokers may help you determine how much it would cost to sell your company. They can also tell you if this is possible. You can then decide if the proceeds from the sale are enough to allow you to take time off or go into a different career that is more fulfilling.
It’s best to let go of a business when you feel exhausted. It can be difficult to carry on after you’ve reached a burn out point and you risk driving the business into the ground if you are not careful.
5. Reasons Business Owners Sell Their Business: The Business Owner is Experiencing Health Problems
Many business owners have been successful well into retirement and still enjoy their work. However, they call us when they need to sell due to a health issue. This can be a difficult situation, but it is sometimes a great opportunity for business owners to slow down and recover and enjoy activities they couldn’t do while working full-time. Sometimes, health problems can be a wake-up call that requires you to slow down and give the reins over to someone else.
6. Reasons Business Owners Sell Their Business: The Business Owner Has Other Business Opportunities
Most business owners aren’t interested in working for another person when they own a business that is successful. Some business owners have multiple businesses and wish to sell one. You may want to spend more time with your family and friends. Perhaps one of their businesses has grown and requires full-time management to maximize its potential. You might find it enjoyable to manage one business but not another. In that case, it is best to let someone else do the job.
7. Reasons Business Owners Sell Their Business: The Business Is Performing At Peak
While some companies can grow their revenue and profits over a long period of time, others experience ups and downs. Many business owners decide to sell their businesses when they are close to retirement and the company is growing. They know that the best time to get the most money for the business is when it is most profitable. Businesses that are in growth and have a bright future will be preferred by business buyers. Even if you don’t want to retire immediately, you can still sell the business to secure your financial future.
You can also continue working for the new owners to help grow the company. This can be rewarding, and it will allow you to transition from full-time to part-time work. You don’t have to lose value in your business even if it goes into recession.
8. Reasons Business Owners Sell Their Business: Business Partner Conflicts
One partner might buy another partner if there are problems between the partners. This is the best option. But, they may not want to sell the other or agree on the price and terms.
If this is the case it’s a good idea to get a Business Broker to help you determine if there is a reasonable asking price. It is a good idea to begin the process of selling the company outside to anyone who is willing to pay more than one of the partners. They will often only require one partner to remain on the company’s board for a transition period. This will eliminate the need to have the partners work together. While the partner who is staying might want to retain some equity, most buyers will want a majority of the company. It is, therefore, easier to sell the entire company than a partnership.
9. Reasons Business Owners Sell Their Business: Business Owner Dies
Although it is best to sell a business before its owner dies, this cannot always be predicted. Sometimes, we get calls from the spouse of the deceased owner of a company. Although it is harder to sell a business if the owner has passed away, we have experience in this area. A spouse, accountant, or another family member can give information about the business to a Business broker and potential buyers in order to provide enough information for them to make a decision on buying the company.
10. Reasons Business Owners Sell Their Business: Business Owner Wants To Do Something New
While you might not feel burnt out or have no other business opportunities, it is possible to decide to take some time off from your work and try something new. Sometimes, the owner of a business may be going through a divorce or experiencing other life changes that require them to take more time off and make money with the sale. If they are not old enough to retire, the sale of the business will allow them to take some time off to think about the next steps in their lives.
Business Owners Sell For A Wide Variety of Reasons
A combination of factors can often lead to the sale of a company, including retirement and relocation, partner problems, burnout, and other reasons. The reasons business owners sell their business vary greatly but the most important factor for business sales is being transparent with the buyer about why the owner is selling.
One of the very first questions that a business buyer will ask is: “Why is the owner selling the business?” They want to understand whether the reason is based on the business or the owner’s personal needs. Either way, it’s important to be clear and consistent with your response regarding your reasons for selling your business.
SELL YOUR BUSINESS With Mission Peak Brokers
Mission Peak Brokers offers confidential consultations to help you understand your needs and determine if we can assist you in achieving your goals.
Our experience includes selling Liquor Stores, Restaurants, Gas Stations and SBA Loans. Check out our video channel and Mission Peak Brokers blog for more information about how we sell businesses.
To schedule a confidential consultation with us to discuss your needs and determine whether we are able to help, please complete our Seller Contact form. Feel free to contact us via telephone or email us.. We hope to hear from you soon.