When is the best time to sell your business?

When is the best time to sell your business?

Unfortunately, many sellers decide to list their business for sale when they are pushed by circumstances, rather than when they can choose the time that will increase the chances of them achieving the best possible price.

Businesses are all too often listed at the worst possible times and for the wrong reasons, such as…
… when their owners decide they want a change because they are sick and tired of running the business;

… when the profits are falling or non-existent;

… or when they are ready to retire and realise no one in the family wants to take over.

But would you buy a business where the current owner hates the business, one that needs money desperately to survive and has no profits, or a business that nobody else wants?

That’s probably unlikely. And any buyer in their right mind wouldn’t either.

When are the best times to sell?

When are the best times to sell?

Your business will be far more attractive to buyers, and therefore easier for you to sell and realise its true value…
… when your business has a healthy balance sheet, your sales are strong and your profits are better,
… when your accounts and finances are in order,
… when the economy is booming and financing is easy to obtain,
… when buyers have time and are actively looking for businesses to buy,
… and when you are still energised and passionate about your business.

Unfortunately, these are the times when selling can feel counterintuitive … you will naturally want to hold onto a profitable business that you love working in. However, here’s why these are actually the best times to sell your business.

1. When your business has a healthy balance sheet

1. When your business has a healthy balance sheet

Your business will always be assessed first and foremost on its recent performance.

Buyers are usually looking for a business that is growing, rather than one that is stagnant or going backwards…

…unless they are looking for a bargain and intend to offer a ridiculously low price and snap your business up for a price well below its actual worth.

 If you compare selling your business to selling your house, selling it at its most profitable is just like selling at the top of the property boom … although it’s tempting to hold onto such a valuable asset, it really does make financial sense to capitalise on market gain.

If your business is well established and has proven constant and consistent year-on-year growth – then you’re in a very good position to sell!

2. When your accounts and finances are in order

2. When your accounts and finances are in order

The end of the financial year and tax time is a great time to sell a business that’s performing well, because you can use the end of the financial year to sell off any unnecessary or old stock, tidy up any loose ends and pay off debts.

At the end of the financial year your financial statements will present a tidy summary of the previous financial year, so buyers can clearly see the profitability of the company and simply walk right in to continue running the business and increase profits.

3. When the economy is booming and financing is easy to obtain

3. When the economy is booming and financing is easy to obtain

It’s a fact. Very few, if any, of your potential buyers will be cash buyers, so if you sell when the economy is booming and financing is easy to obtain, purchasers will not only be prepared to pay more as they see profits rising … you’ll also make your business easier for them to buy.

When you’ve invested a lot of emotion and time into building your business, it’s hard to think about selling it when the economy is booming and your profits and sales are high, but think about the consequences if you don’t sell now.

Once the economy slows, your sales start to decline and your profits shrink, buyers become super cautious, affecting both the sale price and the time it takes to sell your business.

4. When buyers have time and are actively looking for businesses to buy

4. When buyers have time and are actively looking for businesses to buy

The start of the calendar year is a great time to sell your business … in fact, business brokers often see a massive jump in traffic in January and February.

But why the New Year rush?

The summer holidays and New Year are a time of change, when buyers usually have the time to take a break, think about their future and find a business that would suit the lifestyle they dream of for themselves and their family.

5. When you are still energised and passionate about your business

5. When you are still energised and passionate about your business

Buying and selling businesses would be so much simpler if there were no emotions involved and buyers could simply decide whether to buy your business or not on facts and figures alone.

Unfortunately, this is never the case.

Your passion for your business will be the “X factor” in the deal, especially because all decisions are to some part based on emotion. If you decide to sell when you are still energised and passionate about your business, your enthusiasm will be contagious and buyers will see potential and be prepared to offer more.

Selling a business requires a lot of emotional energy … and when you’ve lost the passion for your business it’s hard enough to find the energy for the day-to-day running of it, let alone all of the extra time and effort it takes to sell it!

Not sure when is the best time to sell your business?

Not sure when is the best time to sell your business?

If you’re trying to decide whether to sell your business or not, a business broker can help you weigh up the pros and cons of your situation … as well as provide an informed and experienced perspective on the current state of the market.

At Brilliant Businesses we deliver a complete business sale solution, helping to get you the best possible price we can in the shortest possible time.

Find out more.