Four years ago, a survey predicted that more than $1.5 trillion in business assets would be in play over the next decade, according to the Canadian Federation of Independent Business (CFIB). The survey concluded that nearly three-quarters of small business owners intend to sell or transfer their business.
Since then, the pandemic has taken a toll on many entrepreneurs, who have had to adapt on the fly in a climate of uncertainty. So, if you’re thinking about selling your business, you’re not alone.
But how do you know if this is the right time to sell?
If your business is in good shape, your numbers are solid, and you’re ready to transition into something new, you’ll likely have little trouble finding a qualified buyer.
Before you invest time and money in the sales process, answer these two questions for yourself:
1. Are you selling for the right reasons?
Fatigue and frustration may have you rushing for the exit ahead of schedule, particularly if sales are up and you feel you can get a good price for your business.
But remember: selling your business will trigger a big shift in your lifestyle and finances. After you invest the profit from your sale, you’ll either retire, look for a new venture, or take some well-deserved time off. Regardless of how you plan to fill your days, you need to be sure that stepping away from the challenge of entrepreneurship is the right choice for you – financially and emotionally.
2. What’s your business worth?
Today’s business buyers are well informed and looking for the best place to invest their time and money. They will respect a proper valuation based on the realities of today’s marketplace.
A professional business valuator can help you estimate what your business is worth. They will take into consideration how your business has been affected by changes in the economy and the buying habits of your customers. Consider these three factors:
Temporary changes
If your business has been temporarily affected by supply chain issues or a short-term surge in sales spurred by high demand, your sales projections need to account for a return to normal.
Permanent changes
If your operation made a permanent shift in the way you do business, (such as moving to an online sales model) you’ll need to make projections based on new data and sales trends.
Changes in demand
Business partners, employees, and outside buyers may be willing to pay a premium if your business operates in a booming sector.
Next steps
There are plenty of cash-rich, motivated buyers in today’s market. But finding them takes time and effort. Make sure you, or someone on your team, has set aside enough time to co-ordinate advertising, respond to potential prospects, and follow up with interested buyers. Many sellers engage a business broker, who specializes in finding qualified leads. This takes a lot of stress out of the process and could lead to a higher selling price.
For personalized, objective advice about selling your business in 2022, contact your local Meridian Business Advisor today.
