How To Know When it’s Time To Sell Your Business

Two burlap bags with dollar signs on a balancing apparatus with an alarm clock on one end.

Often, owners have so much equity tied up in their business – financial, emotional, intellectual – that they never even consider the thought of one day selling it. It’s their baby.

While selling your business may not be on your radar right now, the fact of the matter is that it should be. Keeping the thought in the back of your mind at all times encourages you to be more aware of the markets you operate in, of how profitable the business truly is, and what you need to do to ensure it’s as efficient and effective as possible.

Every savvy entrepreneur knows they need to have a sales strategy in the back of their minds, because not only is it the practical thing to do (no one can predict the future), but many of the good habits a person employs when preparing a site for sale can and should be used all the time.

Think about it: why wait to make investments and improvements right before a sale, just so the next owner can be the one to enjoy them? Keeping an exit strategy in mind, and approaching your own business from the perspective of a buyer allows for smart, sober reflection on all its strengths and weaknesses.

While every situation is unique to the business and its owner, there are some fundamental elements should always be taken into consideration when it comes to considering selling your online business.

Are You Ready?

This is a tough question for many business owners to answer because it can be so deeply personal. For many owners, they’re so financially and emotionally invested in a company that the thought of selling it almost never crosses their minds. A quick personal inventory of how they perceive the business and how they themselves fit into it can be invaluable in showing the path forward.

  • Are you invested, or exhausted?

Once the early days of starting a business are behind you, it’s easy to get lost in the reality of everyday operations. It’s important to ask yourself if this is a business you’re still excited about operating, excited about being associated with, and where you’re excited about it’s future.

  • Do you have a long-term growth strategy?

Whether your business is thriving or barely hanging on, do you have a sense of what the future holds? What does the future look like? Is that future something you’re willing, able or interested in pursuing? Thinking about questions like this – even as a simple thought exercise – are valuable in that they allow you to create distance from the immediate, every day demands of running your business.

  • Do you have a plan for your finances and your time?

Selling a business can seem like such a major thing, such a fixed event, that often people don’t properly plan for what happens after the sale. Since both time and money are precious and finite resources, finding yourself sitting idle after the sale with no plan for either can prove costly. Maybe in thinking about it, you realize there are passions you want to pursue at a higher level. Or on the flip side maybe you realize that this business is your passion, and you feel a renewed sense of commitment.

Is The Time Right?

It doesn’t help that the foundations of business lore are often built on stories of ‘the guy that held on too long’ and saw his fortune crumble, or ‘the guy that didn’t hold on long enough’, to see his company become ascendant, making its new owners rich beyond their wildest dreams.

Beyond emotional considerations, there are practical elements that no business owner can ignore.

  • The business has outgrown your capacity

This may seem like a ‘champagne problem’, but the fact of the matter is that many businesses suffer/fail because current ownership couldn’t deliver a company to the next level. This isn’t about throwing in the towel, it’s about knowing your limitations and maximizing your exit from a position of strength.

  • There’s a strong profit opportunity in a sale

Any time you have the opportunity to liquidate your online business, it’s worth considering. Often business owners get caught up chasing an ever increasing ‘profit horizon’ – an unattainable figure that’s always just out of reach – while losing sight of their increasing exposure to risk and potential loss as the company grows. A profit booked today can be invested in a new venture, in a lifestyle change, or simply put aside as a form of security against an uncertain future.

  • Where are market trends pointing?

No business is immune to trends, and it’s important to consider how your business fits

into the marketplace not only now, but in the future. Riding the crest of a wave is an

enviable place for a business to find itself in, but it’s also one where the exposure to risk

is the highest. Realizing that a tide might be turning against you, even if you’re currently

in a position of strength, will allow you to realize maximum profits upon exit.

  • The business is in a stable, strong position

As mentioned above, people tend to focus more on extreme scenarios than they do on the middle ground, even when it comes to selling a business. No one wants to sell their business in a fire sale, and everyone wants to cash out as their business rockets to the top of the valuation curve. But strong, stable, consistent online companies will always be attractive to buyers, who will always pay a premium for peace of mind.

Final Thoughts:

Ultimately, there’s no ‘secret sauce’ when it comes to knowing if the time is right for selling your business. It’s a complicated calculus that factors in not only market trends, but highly personal feelings. The fact of the matter is that any prepared business owner should be constantly thinking about their business, and a part of that is realizing that one day – sooner or later – you’re going to need an exit strategy. The owners that keep this in mind tend to build stronger, more efficient companies, and reap the rewards when it comes time to sell.

David Fairley is President and Founder of Website Properties.com. Having started Hamocks.com, Strollers.com and Drums.com as an early e-commerce entrepreneur, David's 25+ years of experience in the internet and Website Brokerage industry gives him a unique and experienced outlook on all things internet.