Are You Ready to Sell Your Business
Make Sure You Understand Your Motivation for Selling
Are you thinking about selling your business?
This simple one-question quiz will help you to better understand your motivations behind this thought. A better understanding of your underlying motivations will help you make the right decision.
Select the answer closest to your actual reason for thinking about selling your business.
A. "I'm selling my business because of the money I will make on the sale". B. "I'm just tired and it's not fun anymore." C. "I have too many irons in the fire and can't keep up". D. "I'm ready to retire from owning my business".
A. "I'm selling my business because of the money I will make on the sale".
This is rarely a good answer if it is the primary answer. Most small businesses sell for 1 to 3 times yearly cash flow after adding back all owner salary, benefits, fringes, interest and amortization/ depreciation.
Larger mid-sized businesses generally sell for to 3 to 7 times cash flow after deducting for the cost of executive management. While this sum can be significant, it is usually only a few times what you will make this year.
Continuing on with the business will usually make you more money in the long run. On the other hand if you have an offer in hand from a public company at 20 times earnings, take it.
B. "I'm just tired and it's not fun anymore."
This question requires careful digging into the reasons for the thought. If you are really ready to get out of the business, then it is a good reason. If the real reason is that you are just tired under the current conditions and as soon as things improve you will get excited again, think long and hard.
Often during the sales process your broker, intermediary, or other advisor will provide coaching to improve obvious defects in the business to make it more salable. Sometimes measurable improvements occur for the business. Suddenly the owner doesn't really want to sell now that things are moving again.
This is a bad situation for everyone. If what you need is coaching to get out of a rut, hire a coach; don't sell your business. But, if you are really mentally done, sell the business before you completely run it into the ground.
C. "I have too many irons in the fire and can't keep up".
This is a valid reason to sell a business. It is a somewhat common occurrence for multi-location operators who either buy one too many sites or just end up with one or two sites that are too far away to manage.
Often the constant attention you must diverte to an under-performing site will lower earnings of the whole chain. Just remember when pricing the underperforming site for sale that if your not selling much in terms of profits or revenues your not going to get much in terms of price. An old adage that applies here is that the first loss is the cheapest loss. In this instance be prepared to take your loss and move on.
Another variation is the entrepreneur who has a new venture that is overtaking the older established business. Time constraints, management abilities, and variations in potential down stream financial returns may make it desirable to sell the older business. This can free up resources allowing better overall financial returns.
D. "I'm ready to retire from owning my business".
This is the king of reasons to sell. Just make sure its true. Selling a business often means walking away from it completely. Retiring sellers often want to think that they will be invited guests indefinitely.
Usually once the nuances of the business are understood the new owner will want to take the reins and run the business his way. At settlement you will sign an enforceable non-compete that legally and ethically obligates you to leave your old client base behind.
Another frequent issue is that the retiring owner has run the business "just to meet my needs" the last several years. In those instances the lower performance is what the business sale price is going to be based on. If you as a retiring owner want the full price based on what the business could really do - generate those results yourself and sell the business when the numbers are strong.
In general buyers are the least suspicious about dealing with retiring sellers. If the retiring owner has run the business well up to the end they can often get a small premium on their price.
The Bottom Line
There are thousands of variants to these four reasons to sell your business. Each variation comes down to the same underlying thought process-are you selling because of short term issues you will overcome or are you selling because it is time for you to get out? No one can answer this question for you but your future success and happiness may depend upon getting you it right.
If business is slow in your industry but you are hanging on, and you like the business as much as another career, then don't sell. Get the marketing, accounting, coaching or other help to get out of your rut and make it to the good times.
If you are completely burnt out, it really is time to retire, or you have much better things on the horizon then sell the business while it is still performing well in order to maximize your sales price.
Gregory R. Caruso is an expert at helping business owners plan and execute the sale of their businesses. Greg is an inactive CPA, attorney, and business owner with 20 years experience. He can be reached at www.successfulexits.com.
 Google News Updated : Tue, 07 Oct 2008 14:49:35 GMT Police say Kentucky woman kills self, daughters - Forbes
Forbes - AP 10.07.08, 9:30 AM ET Police were still trying to determine Tuesday why a Louisville woman apparently stabbed her two school-age daughters to death and then shot herself. Police say Kentucky woman kills self, daughters Police say Louisville woman kills self, daughters Publ.Date : Tue, 07 Oct 2008 13:38:46 GMT McCain, Obama question each other's character in latest campaign ads - Baltimore Sun
Baltimore Sun - By Paul West | paul.west@baltsun.com Washington - The presidential contest turned increasingly nasty yesterday as Sens. Barack Obama and John McCain launched new personal attacks ahead of the second presidential debate. Video: AP Campaign Minute The Note: McCain Brings Attack to Second Debate Publ.Date : Tue, 07 Oct 2008 11:47:50 GMT IMF Urges Coordinated Action, Sees US Losses at $1.4 Trillion - Wall Street Journal
Wall Street Journal - By TOM BARKLEY WASHINGTON -- With losses on bad US assets alone expected to top $1.4 trillion, the International Monetary Fund urged global policy makers Tuesday to coordinate a response to an unprecedented financial crisis that continues to spread. IMF warns of deeper slowdown amid crisis IMF in 'severe downturn' warning Publ.Date : Tue, 07 Oct 2008 13:21:55 GMT Senator Warned a Friend That Jail Was a Risk - New York Times
New York Times - By NEIL A. LEWIS WASHINGTON - The day after the FBI confronted Bill Allen, an Alaska oil services millionaire, with evidence that he had tried to bribe state lawmakers, he reached out to Senator Ted Stevens by telephone to discuss how their ... Stevens unplugged: a defiant, salty health nut “I Love You, You Know,” and More Revelations from the Stevens Trial Publ.Date : Tue, 07 Oct 2008 12:35:08 GMT OTC Cold Medicines to Be Relabeled for Young Children - Wall Street Journal
Wall Street Journal - By JENNIFER CORBETT DOOREN WASHINGTON -- Companies making over-the-counter cold and cough medicines have agreed to stop marketing the products to children younger than 4 as part of an effort to reduce accidental overdoses, an industry trade group said ... Video: Cold Meds Under Fire, Again ALERT: Drug Companies Warning to Parents Publ.Date : Tue, 07 Oct 2008 14:15:50 GMT Study: Using fan on sleeping baby reduces risk of SIDS - San Jose Mercury News
San Jose Mercury News - By Linda Goldston Ayde Gonzales's mother was surprised when she insisted that her newborn son must sleep on his back, not on his side. Fans May Reduce Babies' Risk of Sudden Infant Death Syndrome Fan in Room Seems to Cut Infants’ Risk of Crib Death Publ.Date : Tue, 07 Oct 2008 12:46:19 GMT Kenya Detains US Author Critical of Obama - New York Times
New York Times - By JEFFREY GETTLEMAN NAIROBI, Kenya - The American author of a best-selling book highly critical of Senator Barack Obama was detained by Kenyan immigration agents on Tuesday as he prepared to give a press conference in Nairobi. Kenya Detains Author of Anti-Obama Book US anti-Obama book author faces Kenya deportation: officials Publ.Date : Tue, 07 Oct 2008 13:00:27 GMT RSS For Web Pages |
PARLOT::Ebooks, Scripts,
Websites, and more... Q: One of my key employees is giving me trouble.... Read More Business owners and managers are busier than ever. As their... Read More If you are a department, division or subsidiary manager, your... Read More Why do managers create low morale as a product of... Read More What is the principal thing you need to succeed in... Read More "Nothing great was ever achieved without enthusiasm." Ralph Waldo EmersonI'm... Read More A 'dirt-world' retail business I used to manage had a... Read More Employee motivation is probably the most important single manageable factor... Read More "Must Project Managers be technically savvy?" This topic always seems... Read More Have you ever sat in a meeting where everyone is... Read More Creativity can be defined as problem identification and idea generation... Read More Facilitating good communication can make the difference between a well... Read More Let's begin by singing the jingle from an old US... Read More Life has always been full of uncertainties. Over the last... Read More Most business owners I work with want to grow their... Read More Steven Covey had the right idea. There are discreet skills... Read More In today's competitive environment, companies realize that a good boss... Read More Everyone at the office thought that using the company e-mail... Read More Now that it is January, many of you are putting... Read More Do you know how many customers you have that are... Read More A series of articles exploring the seven critical areas that... Read More Ethics - in a profession or trade - is that... Read More Building a 'bridge of understanding' between parties is... Read More Do you announce a meeting and find either no one... Read More Workplace diversity refers to the variety of differences between people... Read More
Adsense
websites
The Thick Line Between Buddy and Boss
Passion for Profits
Managers Who Spend PR $$ Wisely
Why Do Managers Create Low Morale? Or Does My Bum Look Big In This?
What Is Business Sense?
Lower the Bar
Paretos Law- Your Formula For Success
Motivating For Higher Performance
Must Project Managers Be Technically Savvy?
Dialogue vs. Discussion
Innovation Management ? The Need For Knowledge Managers
Improved Communication to Improve Results
Your Organization Is Only as Good as Your People
Keys to Feeling Powerfull In An Uncertain World
Is Your Business Healthy?
Five Habits of Highly Effective Conflict Resolvers
Leadership Style: What Makes A Good Boss?
Why Your Company Needs An E-Mail Policy
The Truth About Performance Reviews
Dont Sweat the Small Stuff with Your Credit Policy
The Seven Cs: Partnership Danger Signs - Competitive, Not Complementary Action
Is Your Business Ethical?
Building Bridges of Communication
What Every Manager Should Know About How to Conduct Successful Meetings
Diversity in the Workplace: Benefits, Challenges and Solutions
Affordable and Reliable Web Hosting Starting at $4.49/Month
Business Innovation ? Core Competency and Competitive Advantage
Creativity can be defined as problem identification and idea generation... Read More
Change Management: Getting Everyone on Board the Change Train
How do you get everyone on board the change train... Read More
5 Ways of Increasing Business Profits
The economy may finally be turning around and showing signs... Read More
Employee Surveys: a Strategic Tool for Positive Change
Do you want to measure your workers' level of satisfaction?... Read More
Influencing Change - A Guide for Sellers, Coaches, and Supervisors
When people or groups make a decision to purchase something,... Read More
Presenteeism: The Hidden Costs of Business
(prez.un.TEE.iz.um) nPresenteeism, a relatively unknown concept, is the complement of... Read More
Communicating When A Crisis Strikes
How would you handle communication if your business or practice... Read More
The Paradox of Job Enrichment
Ellen was a clerk working for a large insurance company.... Read More
Manage Your Business from the Rockies, not the Prairies
The day job as a manager is all about managing... Read More
The Professor Makes A Minus Power Move
If you think the power move has costs, consider the... Read More
Employee Motivation: It?s More Than A Paycheck
Managers often ask, usually with exasperation, "How can I keep... Read More
7 Steps To Hire The Best
You can use this step-by-step method to hire applicants who... Read More
Learn to Assert Yourself
Pinpoint your own blocks to assertiveness: fear of disapproval, need... Read More
To Thine Own Self Be True--Its Better for Business: What Arthur Andersen Would Say to His Company
As a child, you probably heard, "to thine own self... Read More
Measuring Creativity, DIY style
Creativity measurement is often required in order to benchmark existing... Read More
Hire The Person, Not The Resume
"? [get] the right people on the bus, the right... Read More
Spinning Gold from Straw: Low-Cost Employee Retention and Motivation Tools in a Changing Economy
New York, NY, February 25, 2005 ? Employee retention and... Read More
ISO 9001 Okay Now You Have It How Do You Market It?
Marketing ISO 9001 2000.Lately we've been seeing a lot of... Read More
Building Shareholder Value Through Your People
Increasing shareholder value is the most important driver for organisations... Read More
Is Chess Good for Management?
The game of chess has been applauded and taught in... Read More
Computer Consulting 101 Hiring Tips (Part 1 of 2)
Does your business need the services of a computer consulting... Read More
Keep Your Good Workers by Building Good Leaders
A recent report from the American Hospital Association's Commission on... Read More
Dissenion Down On The Cubicle Farm
How content and satisfied are American employees? Not very!According to... Read More
A Rare Leadership Skill: Dealing With People Who Want Out By Offering Crowns For Convoy
As a leader, you'll inevitably be faced with people wanting... Read More
Rules for Running a Meeting
As an experienced manager, I can announce without a doubt... Read More
Business Management |