When Should I Sell My Business?
“When should we sell” is one of the most frequently asked questions in business sales, along with ‘how much should I sell for” and “what will it cost me?”
If we consider the when, we should think about three things,
- why do you want to sell,
- how prepared are you for a sale and
- when do you want to sell
These three points not only determine the time pint but go a long way towards influencing the value you will achieve.
If you need a fast sale, then you should probably price your business accordingly. This may mean achieving a lower price than it could have been if you had more time. For most, a fast sale is dictated by a change in financial performance, a new and better opportunity, personal health or family situation. It goes without saying that this means getting on the market fast, like tomorrow fast. Just make sure you invest in great advertising and professional representation to get the job done.
However if you plan to sell to retire or to focus on another business, then you can plan ahead and get ready for a sale and therefore improve the value you achieve. Having a well defined why is key to the buyer understanding your motivations and building trust with you. It also helps determine your time line.
Many sellers approach us and say I need to sell my business urgently. To sell a business ideally you want to be as prepared to sell as possible. This means:
- Try to have your documents available for when your buyers ask.
- Understanding the value of your business and what you are actually selling. For example, if your sale is primarily plant and equipment, or does it include significant branding, customer database, repeat clientele etc.
- Have a realistic goal in mind as to when you want to sell by. We see businesses sell in a matter of weeks, some take several months. You never know when it will happen, but if your goal is short-term, don’t wait to long to get started.
- Prepare (or have prepared for you) a document that will provide your enquirers a good overall description of your business and will catch interest of potential buyers. This is called a Business Profile, or Business Overview or Business Information Memorandum.
Although the why can be dictated by the when as shown above there are also market dynamics that might be worth considering. Selling out during certain times of the year may both maximise your value and improve the speed in which you sell at. For example, times during holiday breaks (even just long weekends) is a time where many “new to the market” buyers do their research for a big change. So its not uncommon to see a spike of sales through several weeks after these periods.
So, Should I Sell?
The truth is nobody can predict the future, and once you’ve decided you wish to sell your business there is usually very little benefit to holding onto it. You should put your business on the market as soon as you have mentally made the decision that it is what you want to do. Buyers are out there looking throughout the entire year, businesses are selling all the time and the fact is, if you wait you might miss a hot buyer and have to wait another month or two for the next one.
The secret is to make sure you advertise everywhere you can so that they see you, represent your business professionally and clearly so that when they receive information they understand your business, and make sure you’re priced fairly so that they are confident you’re reasonable and they can begin the offer process.
If you wish to start the process with Bonza, check out our package below or contact us on 1300 266 922