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Many business owners stay too long at the “punch bowl.” They get comfortable, the business becomes part of their identity, and before they know it, they’ve missed the ideal window to sell. So, how do you know when it’s really time to make that move?
Start with Your Personal Plan, Not Your Business
We’ve sat with lots of owners who have started to consider a real exit timeline. There are a variety of reasons the conversation comes up, but one is arguably the most consistent: is this still how I want to spend my 168 hours per week?
This is why you need to dig deep into your vision for your life, including what life could look like after the business. Of course, we also need to begin with your personal financial plan—can you afford that life? Whether it’s more vacations with family or simply having the freedom to enjoy your time, you need to reconcile the lifestyle you want with the financial realities ahead.
The first financial question has less to do with what multiple you’ll sell for and more to do with what you need to accomplish a life you love.
Consider Burnout, Timing, and Financial Targets
If you’ve addressed the life plan and the finances, it’s time to think about some practical issues:
- Burnout: Are you simply tired? Is running the business no longer giving you the satisfaction it once did?
- Financial Need: Do you need the money from the business to fund your retirement? If so, it might be time to think seriously about cashing out from a position of strength instead of risking market conditions changing.
- Market Timing: On that note, maybe your industry is hot right now. Buyers are practically tripping over themselves to own businesses like yours. All sentiment aside, it’s always worth considering.
But here’s the mistake many owners make: they look at a hot market and think, “Are you kidding me? This business is going to go up forever!” That’s dangerous thinking. Markets don’t stay hot forever, and waiting too long can mean missing your best chance to optimize value.
Don’t Ignore Your Health
One factor we don’t talk about enough: maybe your health isn’t what it used to be. Maybe you feel great, but you shouldn’t wait until your health declines to enjoy life after the business. Regardless of your health today, you need to think seriously about succession. Who’s going to be the next owner of your business?
If there isn’t an internal successor lined up, you need to get on that now. Put some kind of agreement in place with a potential buyer, because if your health takes a turn, you don’t want to be forced into a rushed decision.
Dealing with the Emotional Side of Letting Go
For many owners, the business isn’t just what they do—it’s who they are. It’s how their family was brought up. It’s their social network and their community standing. So how do you deal with the loss of that?
One approach is to recognize that selling the business doesn’t mean disappearing. In fact, a new buyer might love to have you stick around for a while. They know the value you bring—your customer relationships, your industry reputation.
You might stay on as a Chairman Emeritus (I’ve loved it) or take on some other key employee or advisory role. This lets you stay active, maintain your visibility in the community, and preserve the integrity and sense of purpose you associate with the business.
Starting a Conversation
Selling your business is a multi-faceted decision. Our hope is that the preparation process is one of clarity and optimism. A quick checklist if you own a business to help you think through this:
- Get formal valuations done: Starting early gives you the opportunity to maximize your exit value and have leverage going into negotiations. If you’re serious about it, I recommend annual valuations.
- Model your financial plan: Eliminate guesses. Ask us to model variables like exit timelines and different sale prices. See your options.
- Get your financial team together: We call this fully integrated planning. You want your advisor, CPA, leadership team, and estate planner to be on the same page about your plans. Let your team help pave the way for clear decision-making.
The quality of your outcome is heavily dependent on the quality of your preparation. Here’s to helping you make this significant decision from a position of strength.
As always, we are here to help facilitate your entire financial team, aiming to help you accomplish your priorities.
