In this video, we talk about the "when, why, what and how" of selling a business
"Every business owner needs to think about these, so that when that time does come in the future they are that much more prepared and can potentially be the difference between hundreds of thousands or even millions of dollars"
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Transcript:
If you own a business, any business at all, in any industry, at some point selling the business and its assets will happen. Unless you close your business or give it away, it is an unavoidable fact.
It doesn’t matter if you aren’t thinking of selling your business now, it’s really important as a business owner to think about a sale scenario, so that when the time comes, you are prepared and can protect one of your biggest life milestones and investments.
So let’s be real here, you as a business owner are either one of two types. You either started the business with the intention to sell it, OR you started the business without the intention to sell it. The beauty of what we are addressing in this Video, is that it doesn’t matter what type you are.
When selling a business there are 4 key things to think about that are actually really simple, so let’s start with the most important thing to consider above anything else when will you sell it? If you control the when, you also control the other 3 key things the why, the what and the how.
The when is so important, I know that if I’m selling my business, I want to sell at the top of the market, and also at the peak of it’s performance. I know that if I sell at the top and peak, I will maximise my return, and for a lot of businesses this can be the difference between hundreds of thousands or even millions of dollars.
The challenge for most people is selling when your business is doing really well. It feels completely counter-intuitive to even think about selling and we are naturally programmed to hold on to an asset that is performing really really well.
Let me tell you a story, because I experienced this first hand before I was a business broker. I loved my business, it was in it’s peak, it was generating amazing results, and everyone knew it – There was one month where I had 4 “walk in offers” off the street, and those offers meant absolutely nothing to me at the time, because the thought of selling had not ever crossed my mind.
I honestly believed and felt in my heart at the time, that my business would go on like this for ever. And boy did I learn that this lesson the hard way. Eventually my market changed. I had new competitors so the revenue dropped, and the market became heavy with other similar businesses so the price of my asset was diluted.
In the end it took me over a year to sell and it sold for less than a 1/4 of the lowest “walk in” offer that I received just 5 years earlier. If I had planned the “when”, I could have been hundreds of thousands of dollars better off. Aaagh hindsight.
The second most important question to answer is if you were to sell, why do you think you would you want to? There are so many personal reasons owners have for wanting to sell, such as health or relationships and I can assure you this, the highest price is always achieved when the “why” do you want to sell is a commercial reason, not a personal reason. A commercial decision is made with foresight, not hindsight. Don’t let the “why” you want to sell dictate the “when” you want to sell and if you are smart enough it should actually be the other way around.
The third essential thing to consider is what are you selling? What elements of your business are valuable, not just to you, what parts of your business, are going to be valuable to someone else. You need to know what value your business currently has, so that you can prepare the business to be more valuable, and this can take weeks or months, depending on your type and size of business. And again, if you control the “when you are selling”, you can control the “what you are selling”.
Finally, how will you sell it? What are the benefits of using a professional business broker, what level of confidentiality will you need to protect your business throughout the sale, and how will you protect it’s integrity whilst driving the most amount of buyers to make offers on the business?
Selling a business is one of the most satisfying and rewarding milestones that one can ever undertake, and it can also be the most terrifying and emotionally turbulent journey, so making sure you have given some thought to the when, why, what and how, can be a lifechanging approach.
From our small and dedicated team at Vision Brokers and Advisors, our motto is to transcend the standards of the business broker industry. Bye.