For most entrepreneurs there comes a time where you want to sell your business. You’ve pumped all your energy into it over time – and now you want to pass it on. It’s a scary and exhilarating time and there are so many things to remember. Having been through the process a few times – there’s one huge lesson I learned in selling a business that I thought would bring you value.
I’ve spoken before about the importance of being vulnerable not just in everyday life but in business, too. And in sharing this with you, I’m being a bit vulnerable myself which I think is important if I want to share anything of real value with you.
It’s all about the real-life lessons I’ve learned in entrepreneurship. The mistakes I’ve made, and the experiences I’ve gained as a result.
A lot of the time the hardest lessons bring the most value.
Hindsight is Twenty/Twenty
At the beginning of last year, I was selling one of my successful businesses and, as always, I learned a lot during the process.
There are a lot of meetings involved in selling a business. A lot.
It was in one of these meetings going through all the finer details at the end when one of my guy’s just turned to me and said – “So what’s your key takeaway? What’s the biggest lesson you’ve learned from all this?”
And when I really sit down and think about it – the lesson I’ve learned is:
If you’re selling a business, when you *want* to sell your business – you’ve sold it too late.
Outside Your Comfort Zone
What I mean by that is; by the time you have arrived at the moment of ok I want to sell this business – your mindset is now going to be completely focused on “getting out,” rather than “building it up.”
This is the mindset that made your business so successful and valuable in the first place.
Once you’ve come to the point where you want to “get out,” as an entrepreneur, you have detached slightly from the business. Even unconsciously.
Like the phrase “jump in with both feet” – you’ve taken your two feet out of the business – and jumped towards the next phase – getting out of the business.
Time Takes a Toll
The sale of a business is going to take on average 6 months to a year, depending on the size and circumstances.
Here I’m talking mostly about small business (because to be fair, I don’t have the experience with the much larger slots).
So if you decide that it’s time to sell and you start the process, your head is mentally disengaged at this stage. The excitement around your business is going to decrease because you’re that little bit checked out.
And if the process takes 6 months or a year – that time is all going to have an effect on your business.
And ultimately, have an effect on the price tag of your business.
So what I would recommend is; if you have a business where the endgame is ultimately to sell, to actually sit down with your accountants or financial advisor and say “I’m building this business that I will ultimately sell. I’d love you to look at it and “test to waters” on a reoccurring basis. Just to see if there’s interest or offers.”
(And this is something in hindsight I wish I did…)
Stay in the Market
On that basis – you’ll get offers. They might excite you and hey – they might not. But they’ll come.
And hopefully, by the time you do want to sell – there’ll be an offer there on the table waiting for you.
Consistently engage with those who will pitch it to third parties.
The Bottom Line
This is the golden rule in selling a business is;
Your business will never be more valuable to buyers than when you are bang in the middle of its success.
This is the golden rule in selling a business. It might not sit right with you at first, but I’ve said before that being uncomfortable isn’t always a bad thing. In fact, sometimes, it’s a sign that you are doing well.
So if you’re someone who’s thinking about selling in the future, start planning for it sooner than you might think.
If you’ve any questions about this – let me know.
I’ll be more than happy to chat with you.
If you’re looking for a handy guide to help you sell your business;
This booklet from Grant Thornton is a great reference.