Management Tips

When Should You Sell Your Business?

Have you thought about selling your company? Do you have a game plan with specific time frames? Do you have specific financial goals? Are you going to get an adequate return for your personal investment?

Most business owners give these questions very little thought until something happens that forces the subject. Most entrepreneurs focus on building their dream business and making their next big sale. The idea of potentially selling their company is the last thing on their mind. It’s a subject they put off because they think it is only a remote possibility in the future. There are a lot of things we all consider to be topics for “later in life” and then we are surprised by how quickly that time comes.

The important truth is: the wrong time to plan to sell your company is when it is time to sell. Waiting until something happens that forces the decision is the worst possible time to start the thought process. Owners that wait until the last minute often have trouble making any money on the sale of their business and very often discover that they can’t sell now or they would lose everything – and in too many cases they simply have to shut it down. It usually comes as a shock, but very often there is no value in a business that has not been built with selling in mind. And building value in a business takes deliberate planning and usually requires 1 to 3 years to make the important moves that build value.

It is also important to know that most businesses sell because of some forcing event and not because they planned to sell. Forcing events can be anything from a sudden health problem, a law suit, a divorce, a withdrawn line of credit because of a missed covenant, and many other unexpected events. If there has been no prior planning, an owner can suddenly be confronted with a lot of bad choices.

Planning ahead for an eventual sale of your company and making the moves that increase company value can have many benefits:

  1. It is the best “insurance policy” against the unexpected
  2. It can result in a value that can be many multiples greater than a company that does not plan ahead
  3. Companies that work on building the value tend to be more profitable
  4. Owners that have prepared their company for an eventual sale tend to hold on to their companies longer because they are actually worth more to the original owner
  5. Companies that plan ahead find it easier to get bank loans and investment dollars and therefore can build an even more valuable company

You might notice a pattern here. When you focus on building value in your company, whatever you do to make it more valuable will also tend to generate even more value. Companies that start this process sooner are often surprised to see the results and end up getting more inspired to build an even more profitable business. It’s amazing how this works.

There are a lot of highly qualified business advisors that can help companies move down this path. If you want any suggestions, just send an email to and we will send you 2 or 3 names. The benefit of having a professional advisor can be worth many times the cost.