This is the first blog in a series titled “Fix It or Flip It”. This series will address other high-level issues that business owners face when considering a transition plan. Molliter also has a short presentation on this subject that can made to your team or organization. Contact us for more details or skip two part 2: Fix It
Deciding when to sell or transition your business is a very personal and complex question. We’d like to propose a perspective on how to look at your business as a starting point for this crucial decision.
Consider how you look at your retirement or investment portfolio. Perhaps you have stock that has been a great performer for many years.
Do you just assume that it will continue to be great forever? Hopefully your investment advisor reviews your investments regularly to determine if they are the “best” use of your investment capital, your treasure.
As you think about your business, consider that it is more than just your treasure. It also comprises much of your life, your time and talent. Now that you have built your business, it may be time to seek a better use of these resources.
Consider the following questions:
- Are there better ways to spend your time, perhaps with family or traveling? Are you just ready for a change?
- Do you desire to use your talents in another way or to redirect your passion? Could a nonprofit use your expertise or do you want to launch a new business? Perhaps you could take your hard-won knowledge and abilities to the consulting field as way to help others?
- Have you achieved your financial goals? Can you change direction without harming your lifestyle?
If the answers to these questions are predominantly “Yes”, perhaps it is time to transition or sell. It is also important to move before you lose enthusiasm for your business. A decline in value due to a loss of owner enthusiasm can often occur in these instances.
Does going into the office still motivate you? Have sales continued to grow? Have systems and processes kept up with the industry standards or requirements? If the answer to these questions is “No”, the value of your business may erode over time.
We often see business owners avoid and put off this all-important decision to sell their businesses. This is especially problematic when health issues are involved. Being forced to sell due to owner disability or death is the worst time to transition or sell your business. Remember that doing nothing is itself a decision. Doing nothing is only a good decision if it benefits you and your family.
The bottom line: You should sell or transition your business if continuing to own it is not the best use of your time, talent and treasure.
Continue to part 2 of the Fix It or Flip it Series: Is it the Right Time for Additional Investment in Your Business?
Molliter Advisory, LLC, is a boutique M&A firm that works with small-to-medium sized companies to value, market, negotiate and bring to close the transactions of their clients. Their deal sizes range from $500K to $20 million sales prices.