Most business owners share a common dream. You work hard building the business over many years. Sweating, planning, risking it all until that perfect day – the day when you are ready to sell, when the perfect buyer rides up on a white horse, hands you a big bag of money and says: “Good job. Now it’s my turn.” Sweet!
OK, it’s time to wake up. That may be the dream for most of us, but that’s not the way it usually works in real life.
First off, if you think you can control the timing of the sale of your business, think again. Businesses are sold when opportunity, desire and timing align. And getting these three elements into alignment is not easy. Here are just some scenarios that may arise, several from my own experience or that of clients.
Opportunity. A potential buyer appears out of the blue and offers to buy your business, an unsolicited offer. You are caught off guard. You aren’t ready; you feel you are too young to retire; you don’t know what else you might do. Chances are that if buyers are coming to you, business is good. You are riding a wave of prosperity that you hope will last forever and you don’t want to get off. If you are to sell, you are going to be sure that the buyer pays top dollar, plus a little more. Your current success blinds you.
Desire. You’re ready to sell. You’re getting older; you’re tired of dealing with the day-to-day issues; the economy stinks; whatever. Again, you’re ready, but are the buyers? It may be that the business isn’t performing at its best; maybe it needs capital or updated technology and/or equipment. The wave you were riding in the case above has hit the beach and gone back out to sea. Your memory is long, however, and you remember the “good old days” clearly. You may set a price more in line with what the business was worth in its heyday, more than the business is now worth. Once again, emotion gets in the way.
Timing. Business is cyclical. We’ve all experienced that in the last five years. When the cycle is on the upswing, we are less likely to think of selling. It is when the cycle is on the downswing, however, that we begin to think of selling. Finding the “perfect time” to sell is like timing the stock market. Most folks lose.
Depressed? Don’t be! All I’m saying is that there is a strong probability that you will not exit your business exactly when you want and for exactly the amount of money you need. Your dream has turned into a nightmare in which you aren’t in control, and that’s a scary thought.
There is an answer to this dilemma, however.
The answer centers on desire. You need to determine whether you have the desire to sell your business at some point in the future. If you do, you need to define your “someday” and begin planning for “someday” today. It’s not that hard to do.
Run your business as if you were going to sell it tomorrow.
Take care of those improvements you have been putting off. Upgrade your systems. Improve your work force. The timing of the sale is now under your control. You are ready should the opportunity arise, and you are in a position to extract maximum value. Experts suggest that the best time to sell a business is halfway to two-thirds of the way up in the business cycle. When you are prepared, you are in control. You can influence the outcome.
By defining your desire, you have control of timing and are in the best position to capitalize on opportunity.
Dave Driscoll is president of Metro Business Advisors, a business intermediary and mergers and acquisitions firm helping owners sell their most valuable asset. Reach him at DDriscoll@MetroBusinessAdvisors.com or 314-303-5600. For more information, visit www.MetroBusinessAdvisors.com.