There is no better feeling as an entrepreneur than to start a business, work hard to build it up from nothing and then watch it succeed beyond your wildest dreams. It is the validation of your investor’s faith in you, even if that investor is only you or your family, as well as an acknowledgement that you read a need in the marketplace correctly. But whether your company is successful or not often hinges on some very slight details, a lucky break with a competitor, a timing situation working out in your favor, or a quick infusion of cash when you need it most. Sometimes you can will these things into being, and sometimes you need to know when the fight has been lost. Starting any business comes with a risk, but selling it doesn’t mean you have failed. The real key to financial success is knowing when to get into an investment while also knowing when to get out. But how do you know when that is the case, especially since your passion for the company may still be there? Here are five signs that it’s time to sell your business.
The first sign is if the company is making too large a demand on your time. Most small business owners will tell you that a startup is a seven-day-a-week job, and time is the ‘sweat equity’ you have to put in before anything else. And while it is true that your time is the best thing you can give the company, your time is also a valuable asset. Are you being rewarded for all of that work? If the company has been going for several years now and you are still not being properly compensated for the time you put in, it may be time to sell. This is especially true if your commitment to the business is hurting your family relationships.
Along similar lines, you should consider selling your business if it is using up far more money than it is creating. A business takes a real financial investment at the beginning, and every savvy entrepreneur knows that it takes money to make money. But while this is fine at first and even for several years after you’ve opened your doors, at some point the business must be expected to make a profit. How long you are willing to go without is up to you, but you should never keep a business afloat if it means bankrupting you and your family, regardless of how painful the decision to end it may be.
Some small business owners didn’t choose that life, but had it thrust upon them through inheritance. If you’ve taken on a business from a parent or other family member who has passed away, that alone isn’t a good enough reason to hang on to it. You must be interested in the business and willing to learn, or you’ll have to hire people on who are. Don’t suffer doing something you hate just because your deceased family member would have wanted it that way. Love your small business, or sell before you come to despise it.
If your business is a partnership between two or more individuals and there is some sort of major falling out, you should definitely consider selling. Partnerships only work when everyone is on the same page, with the same goals in mind. Obviously every little disagreement isn’t worth dropping your business, and only you can know how significant and permanent that falling out really is. But if you cannot see eye to eye with your business partner, sell the company before that animosity destroys it.
Finally, another great reason to sell is if you receive an offer to purchase the business. This means that you’ve been successful with the company to such an extent that investors have taken notice. If your company’s value is at an all-time high and the offer that is made is attractive to you, it may be the perfect time to get out. Definitely discuss it with your local attorney and Tampa business broker to make sure you understand all of the details. But if part of your goal with the business was to eventually sell it and move on, take that opportunity when it presents itself.