Whether referring to stocks, home sales or sales of any other item or commodity, a common question lately is, "How can I beat the market?"
I often get the same question regarding the sale of businesses. Owners want to know if now is the time for them to beat the market and maximize the value of their business.
The answer, however, is that there is so much more that contributes to selling for top dollar than just timing the market. A market may be positive and riding high, but an unhealthy business will still be difficult to sell.
Here are two areas to analyze as you contemplate selling your business.
Business health
What are your financial trends? Your business will always sell for more if the numbers are trending up, than if they show a downturn. Many owners have a tendency to hold their businesses too long, rather than opting to “sell high.”
How about your employees and infrastructure? Are they happy and on board? Is everything humming along? Your business will sell for more if there are no major issues with employees and the staff is committed. The same can be said for client and customer relationships.
Personal commitment
How do you feel about your business? Do you have the energy and commitment to keep it going strong? Business owners often underestimate the time needed to sell their businesses, and in the end, “run out of gas.” The business suffers and ultimately, the sale price goes down. To maximize the value of your business, it is important that you are able to give it your all until the day you hand over the keys.
The health of your business and your willingness to put the effort into keeping it sharp have a much greater effect on value than the outside forces of the overall market. If your financial trends are strong, but you feel your energy waning, now might be the perfect time to sell and get the highest price, regardless of what the business section of the newspaper might tell you.
If the financial performance is down, but you have the commitment to grow the numbers, you will likely get a higher price in the future. Take a look at your business’ health and your own personal commitment before deciding when it is time to sell your business.
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