Like most entrepreneurs, you probably think about the many ways you can help your company take off and grow. But you should dedicate an equal amount of brain power to planning when and how you’ll sell what you’ve built. In fact, deciding when to sell your business can be just as important as deciding when to start one.
The day will come when it’s time to move on. Regardless of how things end, it can be difficult to determine the best time to capitalize on your creation. Here are four signs you may want to consider getting out of the game:
1. You're drinking more and sleeping less
Many business owners can attest that being the boss can become so stressful that your entrepreneurial dream can feel like a nightmare. Certain businesses are so consuming that it’s unhealthy to remain in the driver’s seat for too long. And at a certain age, you may not have the energy needed to keep things growing at the pace you used to. It boils down to whether or not you still have that burning passion that initially got you hooked.
When you’re driven by an overwhelming desire to succeed, you can easily power through the long hours and drudgeries that come with the job. Once the thrill is gone, it’s often better to hand the reins to someone else.
Bottom line: If running the show is taking its toll, it’s time to come up with an exit plan ASAP.
2. The market outgrows your company
Markets used to evolve much slower, but technology has changed that. It has caused entire industries to become irrelevant, or at least far less profitable. For example, print media was a primary news source for many years. But since the internet went mainstream, print media has been struggling.
The same goes for taxicabs and Uber, retail storefronts and Amazon, and so on. It would be best to conduct a market analysis before launching, but these days, it’s easy to be blindsided by the flood of new innovations.
The key is to keep a close eye on your sector for possible threats, so you can get out before it’s too late. With the market's exponential evolution, your exit window may be short, so be prepared to act fast.
3. Your company outgrows your skills
The leadership skills required to be successful often depend on your company’s stage of growth. Startups, for example, typically require leaders who are highly creative, flexible, and have the ability to sell people on their business ideas.
More mature companies, however, require leaders who are also excellent managers. This is why many companies bring in veteran C-Level Executives to handle growth and operations at a certain point.
Staying on top of these changes requires entrepreneurs to be extra self-aware. It can be confronting to realize your skill set no longer matches the needs of your company, yet it’s something that’s often inevitable. Sometimes, your company’s continued success depends on you stepping down with a wise plan.
4. An incredible opportunity presents itself
At some point, your business will reach its peak value, and cashing out at that stage may be your best option.
Sometimes, being bought out by a more established brand can provide your company with the resources it needs to reach the next level. If that’s the case, a sale could be a great way to get you cash in hand and your company the resources it needs to grow to its next level.
Entrepreneurial energy comes with a shelf life, so you might decide to pursue another business venture while you still have the youthful vigor needed to start again. If there are other terrific opportunities on the horizon, consider making your exit sooner, rather than later.
Taking the next step
Deciding to sell your business is a big step, and we can help you sort through the numerous legal, tax, and financial issues involved. We can also help with the labor-intensive process of actually selling your company.
From gathering all of the required documentation to negotiating sales terms, we can guide you at every step of the way. When it comes to making your exit as smooth and profitable as possible, with us as your Family Business Lawyer®, you already have an ace up your sleeve.
We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule. Or, schedule online.