Entrepreneurs who have built their business from the ground up often view their business as more than an occupation or investment–it is a critical component of their personal identity and legacy.
While there is absolutely nothing wrong with being proud of the hard work, perseverance, and creative vision that your business embodies, there may come a time when it becomes prudent to sell.
Rather than maintain a “til-death-do-us-part” relationship with your business, be conscientious of the following signs that it may be time to move on.
- You Receive an Offer that Cannot Be Turned Down
It takes a long time for a small business to become profitable, with the vast majority liquidating before they ever get in the green. Therefore, when your business starts generating healthy revenue, it can be extremely difficult to sell with your dreams finally coming to fruition.
While it is okay to resolutely reject many strong offers with confidence, there is a chance that an offer crosses your table that you simply cannot refuse. One highly publicized acquisition saw Teladoc Health purchase upstart Livongo Health for a whopping $18.5 billion, despite Livongo having a market cap less than $12 billion and extremely limited earnings numbers on which to base any kind of revenue trend.
Even though there is every reason to believe that Livongo, on its own, would have become a remote healthcare juggernaut in time, the current over-offer was simply too good to turn down, making the sale a no-brainer for ownership.
As such, it is important that you keep track of your business’ assets and liabilities and use a business valuation calculator to get a firm idea of what your business is worth in order to be ready to pounce when an offer that is too good to pass up comes along.
- There is a Shift in the Market
Every product has a life cycle that consists of five phases–development, introduction, growth, maturity, and decline–and it can be argued that businesses themselves follow a similar path. While these stages used to take years, if not decades, to play out, the rapid development of technology has made entire industries appear and disappear in the blink of an eye, so business owners must be more alert than ever in their monitoring of market trends.
As a major aspect of successful business is mastering a core competency, it can be extremely difficult for businesses to change their model to profitably capitalize on new trends. Therefore, if all signs are pointing to a shift in the market that your business may not be able to satisfy under its current model (think video rental stores in the mid-00’s), you should strongly consider all offers to sell.
- You are Running Out of Cash
Starting a business can be scary, with fear partially wrought by the “winner/loser” mentality that tends to stigmatize entrepreneurship. Start a successful business, and you’re a winner; fund a business flop, and you’re a lovable loser.
Nobody wants to admit that they have lost, so many people will continue throwing money at a business, even when the writing is on the wall. Remember, most small businesses never take off, so feel no shame in giving it your best try and moving on to the next venture. If you ever feel the urge to dip into your retirement account, refinance your house, or take out bad debt to keep a struggling business is afloat, the time is right to sell.
- You Have No Work/Life Balance
One of the main reasons businesses fail is that entrepreneurs severely underestimate the amount of work owning a business will be. This is compounded significantly in the era of online reviews, as finicky “experts” with nothing but time on their hands can undercut you at any time of the day with a scathing review, making customer relationship management an around-the-clock job.
Because running a business is hard work, it only follows that if your business is successful, it is because you are working hard. While working hard can be a good thing, with some people functioning at their best when every hour of their day is action-packed, you need to be cognizant of the signs that running a business may have become too much for you, including:
- Changes in health, such as fluctuations in weight and blood pressure
- Strained personal and family relationships
- Irritability and lack of interest in things you used to enjoy
Making good money and being a successful businessperson are admirable goals. However, nothing is worth sacrificing quality of life, so if you find that business is infringing on this, sell your business and enjoy the cash.
Skylar is a contributor at Raincatcher and a blogger. His contributing site, Raincatcher, provides useful tools and advice for business owners such as a business valuation calculator, exit planning strategies, and guides to selling your business.
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