Close vs. Sell: What’s the Best Option for My Business?
So, you have been in business for a while, and you’re ready to move on. Perhaps you are actually moving to a new state or province, or you have other interests that you’d rather prioritize. Whatever the reason, you’ve decided to let things go, but you aren’t sure whether you should shutter the doors or sell to someone who can continue your legacy. Here, BuyAndSellABusiness.com presents some advice to help you make your decision.
Have You Lost Your Passion?
Chances are, you started your business because you were passionate about what you did. Unfortunately, the things we were eager to do at one point in our lives don’t stay with us forever. If you lose your passion, your business will suffer since you won’t have the mental or physical energy to put into your profession. In this case, selling is a smart option. On the other hand, if you’re simply burnt out, now might be a great time to make changes that help you break a humdrum routine and get you back into a growth pattern.
When to Sell
If you’ve decided that selling is the best option, the next decision you have to make is when. It’s usually best not to jump into a rush decision as this can leave you taking much less than your business is worth. One option here is to take the time to learn how much your business is actually worth. If business valuation is not your strong suit, consider going back to school while you continue to keep things going. To see your options, look online for a program that lets you work remotely and is both accredited and affordable.
While you’re in the process of researching and weighing your options, do not say a thing about the possibility of a sale to anyone related to your business. Creditors and vendors could pull funding if they learn of an impending sale, so keep things under wraps until you have everything nailed down.
Using the Profits
If you plan to start a new business, you can take the profits from your sold business to use to launch your new endeavour. However, there are many other reasons that you might want to sell. Acquira notes this might be something personal, such as traveling or starting a new hobby. You may also have to sell a business to settle significant medical debt or legal issues.
Documenting Change
If you’ve made changes to your business in anticipation of taking it to the market, you’ll need to document these in your business's annual report. Changes, including name, address, new membership, or release of shares, must be reported annually; failure to do so could result in significant penalties or a full revoking of your business license. Having a maintained business report is also important if you plan to sell, as investors will take a close look at your company’s financial health.
Who to Sell To
You’ve explained to the staff that changes are coming, you’ve got your financial reports together, and you have an idea of timing. Who do you sell your business to? You have many options, and the BDC explains that, in addition to investors, you might sell to a key employee or co-owner. Your ultimate decision should be based on what you want to happen with your legacy once you step away.
You can also choose to list your business on BuyAndSellABusiness.com. This service allows you to select the perfect new owner for your business, no matter the type, and avoid costly broker’s fees and retainers.
Making Your Decision
Whether you are a main street business or larger corporation with a major revenue stream, selling your business is a big deal. If you have time before it’s time to move on, consider going back to school for an education to help you determine what you’re actually worth. Regardless of timing, make sure you keep your reports filed and that you choose the purchaser wisely if your name will remain attached to the business entity.
Contributor: Gloria Martinez
Gloria loves sharing her business expertise and hopes to inspire other women to start their own businesses and seek promotions in the workplace. She created WomenLed.org to spotlight and celebrate women’s achievements.
Opinions expressed here by contributors are their own.
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