Is Now The Right Time To Sell Your Business?

Deciding when to sell your business is one of the biggest financial choices an entrepreneur can make. Whether you want to retire or move on to new opportunities, timing can dramatically impact the final sale price.

Introduction: When to Sell Your Business

Whether you’re looking to enjoy your retirement and reap the rewards of what you’ve built or you’ve simply found other opportunities that you want to explore as an entrepreneur, selling your business is often the most lucrative way to take a step back. However, whatever your desires, timing plays a huge role in determining whether now really is the best time to look for a buyer. Here, we’ll look for some of the indicators you might want to keep an eye on.

Is Your Business on the Way Up?

In most cases, investors and entrepreneurs want to buy businesses that have the potential for growth and to reach the next level with their management. To that end, you should look at the indicators of an upward financial trajectory above everything else.

This means you should be able to demonstrate consistent, predictable financial growth at a minimum. If your business is in a booming market, with the potential for rapid growth, so long as it gets the right investment, that can also attract the types of buyers who make their living investing in businesses to flip them.

On the other hand, if you wait until your growth starts to slow down, it can reduce how much leverage you have when negotiating sales.

Do You Have A Transition-Ready Team?

It’s not just the equipment, assets, and business model that a buyer will be acquiring; it’s the team that you’re leaving behind, as well. If you, as the founder, are a critical component of the business’s success, that might speak well to your own leadership and management abilities, but it doesn’t make for an attractive prospect to anyone looking to fill your shoes.

On the other hand, if you have developed a reliable management team, delegated key responsibilities, and built systems that function day-to-day without your constant involvement, then your business can make for a much more attractive prospect. If you’re able to guarantee (as much as you can) some continuity in leadership, management, and the skill base of your team, it can be easier ot negotiate terms that work in your favor. 

Get a Clear Valuation Before You Sell

How much a potential buyer is willing to pay for your business can depend on a wide range of things. However, you can get at least a baseline valuation of your business, based on the assets, revenue, profit margin, and other factors.

You can work with professional valuators to work out the details, but there are industry-specific tools that can help you start with a general estimate, like this dumpster rental business valuation calculator. You should also work out how much money you can get for liquidation, which is effectively the value of your equipment. How much a buyer is willing to pay for your business won’t always match your valuation, but it does give you a strong position to negotiate for.

Before you settle on a number, it can help to compare your valuation with established guidelines from the U.S. Small Business Administration (SBA), which provides helpful frameworks for understanding business value and industry norms.

Take a Closer Look at Market Conditions

The position and potential of your business are not the only things that are going to influence your sales, unfortunately. You need to look at what’s happening around it, as well. Market conditions could be favorable.

For instance, if you see businesses in your industry selling for the higher range of their potential value, or notice a rush of buyers aiming to find a place in your industry, it could be worth striking while the iron is hot.

You should also keep an eye on interest rates, private equity activity, and other indicators of a strong seller’s market. On the other hand, signs of economic uncertainty can make buyers less eager to hop on new opportunities, so it might be worth holding back, if you can afford to.

It’s also useful to review current listings and recent sales data on platforms like BizBuySell, which publishes quarterly insights on what businesses are selling for across different industries.

Consider Your Personal Goals and Readiness

Sometimes when to sell your business comes down to personal timing. In some cases, personal readiness may trump other factors. For instance, even if you’re not getting the offers that match the higher end of your valuation estimate, if you have plans that you want to act on with specific timing, you may be willing to take the offer just to get an exit strategy.

On the other hand, sometimes, it might be worth holding back, even in a strong market, if you’re not personally ready for the next step yet. Buyers want committed sellers who are clear about their intentions, so evaluating your personal goals upfront can make the process a lot smoother.

Has Your Business Outgrown You (or Have You Outgrown It)?

Your own leadership style can also determine when to sell your business.

Often, it’s the case that a business owner has outgrown their business and wants to move on to new challenges and new markets, to see how much further they can go. In other cases, however, it might be that your business has gotten too big for you. Some people thrive in running small businesses, managing customer interactions and staff management directly, but don’t like having to take a step back to delegate more and take a more bird’s-eye view of the business.

If you feel like you’re struggling against the growth of your business or trying to rein in your more ambitious team members, that might be a sign it’s time to look at pulling back. It might be your business, but stifling its potential to stay in your comfort zone isn’t good for you, the business, or the other people working within it.

Is It Time to Get Out of a Sinking Ship?

It’s not the most attractive prospect possible, but sometimes, it’s worth selling just to make sure that you don’t start losing more money than you need to. It could be the case that the business isn’t doing so hot.

If you don’t believe in its chances of making a comeback, then an exit strategy might be just what you need. On the other hand, your business might be in a sunset sector, and you want to get out of a dying industry while the getting is good.

Final Thoughts: How to Decide When to Sell Your Business

You don’t have to guess. A closer look at your company’s financial health, growth potential, and the broader market can help you make an informed decision about when to sell your business.