Timing the sale of a small business should not be driven only by the economic cycle. A good exit strategy has to take the whole picture into account. The decision to sell a business is a life decision. Basing the decision only on speculations about the economy could be a big mistake. As business brokers in Toronto and surrounding areas in Ontario, we constantly meet potential buyers who are paralyzed by fear about recession. They end-up wasting years with no income and never make a decision about buying a business even when the economy improves.
This is the dilemma facing small and medium size business owners thinking about an exit strategy. As a business broker, I am constantly interviewing business owners inquiring about the business sale process. It is clear that the decision to sell a business is not an easy decision. Potential business sellers face a numerous uncertainties:
Uncertainty [...]
In our business brokerage practice we frequently receive calls from business owners almost desperate to sell their businesses. Owners start by explaining their business and the huge potential it has for the near future. Then, when I ask about their bottom line, their become very uncomfortable talking about it. These are generally businesses started in the two previous years with unproven business models. The owners made important investments in equipment, leasehold improvements and employee salaries but could not recover their investments for multiples reasons. Naturally the option to sell the business appears very attractive since it
Most business sellers don’t know where to start when they want to explore the idea of selling their business. In most cases this is a one time event that business owners are not prepared for. A variety of books have been written about the subject and can provide valuable information about the business sale process. Business owners are however very busy running their businesses. Purchasing and reading a specialized book is rarely the natural option.
As a first approach, we suggest that a business owner contemplates these questions:
- Why would you sell your business?
- Are there other options available?
- What is your plan after