There are many reasons why founders decide to sell their business. In recent years, the rise of the “unicorn startup”, a term that defines a company worth more than a billion dollars, has left many founders hoping for the day that they will receive a generous offer from an investor or business that will allow them to retire early. But when it comes to selling your business, the power isn’t only in the buyer’s hands, but also the business owner. To ensure a successful sale, you have to be prepared.
Whether you have already been approached by a potential buyer or are currently preparing to your company to be a viable option for purchase, here are a few ways you can gauge whether or not it’s the right time to sell your business.
Growth has stagnated, but potential has not
For many startups, keeping up momentum can be difficult, especially if they are operating on a limited budget. Of course, there are ways of boosting your finances, such as seeking out investors, or crowdfunding, but for some founders a long periods of stagnation can lead to a lack of motivation, or the desire to move on to a new project all together.
Yet, just because a startup is facing obstacles, that doesn’t mean that the potential is gone. In fact far from it. A company doesn’t have to have reached a stage of full maturation for a buyer to become interested. In fact, it’s common for investors and companies looking to merge to reach out to founders that have developed a strong business model that has shown great potential for growth.
You’re doing well, but the competition is better
Before becoming discouraged by the fact that your competition seems to be doing better than you are, remember that there’s plenty of ways you can up your game in order to compete if you are not ready to sell. But, if you are indeed ready to move on and notice that similar platforms are outperforming you this could be a sign that it’s time to move on to a new project. Merging or selling your business to a large scale enterprise in your industry is an effective way to deepen market penetration and scale quickly.
It’s important to remember that you need to be prepared to show potential buyers why taking on your business will be beneficial to them, so be sure to strategically carve out a business model that highlights your strengths and weaknesses so interested parties know what they’re getting into.
Ask an expert, just to be sure
While you may feel confident in your decision to sell, it’s always good to get a second opinion. Consulting a mergers and acquisitions expert can help you make an informed decision on whether or not it’s a good time for you to put your businesses on the market, based on your personal development and current financial status. Perhaps they will tell you to hold back in order to make more preparations in order to get the best deal, or they can help you move forward as you seek out an appropriate buyer.
Even if you have your heart set on on launching a new business or jumping into a new project, if you are going to cultivate a successful career both as an entrepreneur and founder, you will need to exercise some patience.
What may seem like a dream offer for many business owners doesn’t necessarily mean that it’s time to pack up and sell the business. There are various factors that need to be considered before making anything official. Thus, if an interested investor gives you an offer, take this as a welcome opportunity to reevaluate your business plan and speak with an expert who knows what it take to sell a business.