3 Things You Should Think About Before Selling a Business

MichaelContributed, Education, How to, Making Money, Misc18 Comments

This post may contain affiliate links. Please read my disclosure for more info.

There are many reasons to sell a business.

For many, it may be that the current owner seeks a change of pace or a new opportunity, or maybe it is a financially beneficial move on the part of the owner. Maybe the owner is retiring, the number one reason to sell according to IBBA Market Pulse.

Regardless of why the decision to sell is being considered, there are a number of factors that need to be given careful thought before any documents are signed.

Selling a business is a permanent step; once it’s done, the business is sold and it can’t be reclaimed.

So to help business owners out there make the right choice, here are a few things to consider:

Selling A Business Before Retirement: Consider The Emotional Impact

Retiring can be an emotional time period and one full of uncertainty. Retirees are entering a strange stage in their lives where work is no longer expected of them, and suddenly they have so much more free time. Some become aimless, and others end up returning to work.

This can be especially difficult if one is considering selling their business, too. They’ve invested years of their life into building it, so they might be attached to the company and the people working there. It can be hard to let go, especially when they’re entering retirement.

Things You Should Think About Before Selling a Business

Business owners should carefully consider their options if they plan on selling and retiring. They can always delegate and still own.

On the flip side, retiring after selling a business can be incredibly liberating.  After selling my business in 2011,  I choose to retire early shortly thereafter.  The freedom to pursue other passions and be 100% present with my family is a huge blessing.

So, just consider the consequences either way!

Consider The Company’s Culture and “Soul”

This ties into the emotions attached to a company, but the idea that the company could change into something else entirely upon sale can be one that gives owners pause. Preserving the “soul” of a company can be important to some owners who want their successor to keep the culture and the image of the company intact.

If a business owner is still looking to sell but is worried about the company changing or losing itself, then they should put all their cards on the table. The owner must tell exactly how the company operates, what its goals and mission statement are, and explain the culture that exists there. Let the potential buyers know exactly what the company stands for. They might decide to change it anyway, but at least an effort was made.

I can assure you that no one will run your business like you.  And, if you’re going to sell it, it’s the new owner’s right to change things up.

Bottom line… if you can’t handle someone else running “your” business unlike how you would, then don’t sell it.

Stick Around For a Little While

During the transitional period between owners, offer to stay and help the new owner get used to running the business. Say goodbye to employees, make sure that everyone adapts well, and offer advice and assistance so that the new owner understands how to work in their role.

Selling a business can be an emotionally and mentally draining experience. A business owner needs to make sure that this is what they want and that they have explored all other possibilities. Don’t make a hasty decision.

After my own sale, I stayed with the new company for ~2 years.  I helped to transition the clients, employees, and processes to the new owners.

It was certainly an emotional process, especially since the new company didn’t have the same values as I did.  But, I was proud that I was 100% transparent to my staff and did everything I could to assist them during the transition.  Some stayed, and others left.

Final Thoughts

There are so many reasons to sell a business, but make sure you take the time to think and feel about the decision.

The same holds true for buying a business.

If you’re truly an entrepreneur, consider starting out small with your own business and see how far you can grow it.

It’s not for everyone, but if it’s for you, it’s a fantastic FIRE strategy that can really accelerate your path to freedom.

If you’d like to know more details about my own business that I started and sold, you can find additional details from my guest post on Financial Samurai.

Readers, what are your thoughts about owning a business?  If you do own one (or plan to own), what is your anticipated exit strategy?

Follow me

Michael

Hi, I have been blessed to take an early retirement in my mid-30's so I can focus on becoming a better father, blogger, and investor.

My goal is to help you find your personal path to financial freedom, and to enjoy the entire journey.

More about me
Follow me

18 Comments on “3 Things You Should Think About Before Selling a Business”

  1. I have never sold or bought a business before. But I sure hope one day I’ll be able to at least have the option to build a business to a point where I have the option to sell it. I think you made a great point about the emotional impact of the sale. When we invest so much time and energy in something, it seems to have become part of us (like our baby). But I’m sure in a way it can make someone really happy about their effort!

    1. Ms. FAF, perhaps your fast growing blog will become your thriving business! I’m sure there could be some emotions tied to it if you ever did want to part with it. 🙂

  2. Great position to be in…to have a business someone wants to buy. I have been a employed physician for my entire career and never had the opportunity to sell a business. I can see how there would be an emotional attachment and thus a pro-con list or SWOT (strength, opportunity, weakness, threat) exercise would be helpful to make sure it is the right move.

    My aunt just sold her business of 20 years (a mailroom service) and she could not be happier!

    1. EJ, I certainly agree it’s great to be in a position to sell. Many times owners overvalue their business because it’s so close to them. In actuality, it’s only worth what someone else is willing to pay for it (kinda like real estate). Did you ever consider practicing in a private group?

  3. Right now, I am looking at how to turn my business from one that is focused on me helping clients to one where the business helps clients. That will make it much easier to sell when the time comes. And just for the record, I have a client who sold his business and bought it back about 7 years later 🙂 So it may not be forever…

    1. Good distinction, Jeff. Changing “me” into “the business” completely changes the way owners will grow their business.

      And, I have heard great stories of people buying back their businesses many years later and then growing it again!

  4. Great article. I have sold a business, I had no inhibitions about selling and it was probably one of the better decisions I have made. I also stayed to help with the transition with clients and employees. It’s very nice not working 60+ hrs a week.

    1. Steve, it sounds like your decision was decisive and to your liking from day one! Congrats. Not having to report to 60+ hr weeks is a phenomenal luxury that many would envy. 🙂 What kind of business did you sell?

      1. Hi Michael. I sold a small landscaping/excavating/trucking company. I never had any major problems but it was nice to unload all the liabilities a small business has, taxes, payroll, equipment breakdowns etc. Now I kept enough clients to work part time with no stress and life is great !!

  5. This is something I have thought about for Breakout Mentors (https://breakoutmentors.com). Not any time soon, but it is good to have an idea of the eventual plan… right now though there is so much growth potential that I don’t know where things will be. So while I think about it from time to time, definitely not ready to commit to anything.

    1. Yeah, no rush when you’re having fun growing the business, Brian! It’s great though you are thinking about it because it does affect the way your strategize your companies growth.

  6. I sold my blog (labour of love, started it in 2009) in 2012 and continued writing on the blog as a freelancer for 5 years. It was nice to be able to continue to express myself and express my creativity but not have to deal with the management/ promotion side of things and worrying about traffic etc. Then my writing was no longer needed by the new blog owners (yes I admit, it hurt a little lol) so I decided to start a new blog.

    Definitely lots to think about when selling the business.. in hindsight I think I should have kept at it but it did take up a lot of time, which I didn’t have much of at the time.

    Anyway, great post, food for thought!

    1. That’s cool that you sold a blog! What was it out of curiosity (if you don’t mind sharing)? Yeah, it’s a bit strange watching someone else run your former baby. I’m sure you learned a ton from your experience.

  7. Interesting stuff Michael! I’m always curious about what would drive someone to sell a thriving business, so it’s great to hear perspectives like yours.

    Just curious — what was your business that you sold?

  8. I have cellphone stores, I had 7 locations at the time. Sold 1 at 100k which I know it’s not much but I needed some of the mokney right away. Years prior that I sold one for 15k that wasn’t producing money. And also bought another at 15k that produces more than what I paid every year. Still own 5 locations and plan to grow it to 10 locations by the end of next year. Hopefully, making lots of money it’s been hard after 2 locations went badly…so , set us back 3 years literally and thousands of dollars.

    1. That’s cool, Andy. I can imagine owning multiple stores is both lucrative and challenging. Are you able to streamline processes between the stores and share resources?

Leave a Reply