When Is the Best Time to Sell a Business?

Men shake hands at business meeting

If you have a business right now and you are planning to sell it, you have to consider the right timing. For business owners, there is a right time to sell a business. You can’t just sell it today or tomorrow because you want to. There are things to consider and metrics to use to evaluate whether your business is ready to be sold or not. Let’s take a look at some points to know the best time to sell your business.

When to Sell a Business

Is it profitable and growing?

The first thing you need to consider if you want to sell your business is its profitability and growth. You need to ask yourself, is it profitable and growing? If yes, that’s the right time to sell your company as more buyers will be interested to acquire it from you. More people will be willing to buy a business that is profitable. Remember that every time you sell a business, it has to be valuable. You need to give value to your clients if you wish to stay longer in this kind of venture.

How would you know if your business is profitable?

You have to prove the value of your business to your clients. To show them its profitability, there are certain things you need to look into. The first one is the financial statement of your business. Do you have a clear and accurate financial report to submit to your potential buyers? The figures in your financial statements need to be accurate and what happens in your business should be reflected in the reports. The more realistic the figures are, the more you can convince your potential buyers to acquire your business.

Usually, potential buyers look into financial statements to check the past and present performance of the company. These statements summarize everything about your business–your assets, liabilities, equity, revenue, and expenses. With these reports, you can easily show the potential of your business to your buyers.

But, this is not where the negotiation ends. You also have to consider if your inventory is up to date. Do your business have a high inventory rate? The normal turnover rate for businesses is one year. However, the rate depends on the type of business as well. If you have a large inventory, you need to sell them off first as they will impact the value of your business. The more products you have, the more expensive your business becomes. it’s seldom that clients would want to buy a business with a huge inventory on hand. If you want to make the sale fast and convenient, sell all your inventory first.

Another thing to look into is your equipment. As part of your assets, you have to make sure that what your client is getting is worth the price they are willing to pay for. Check if your equipment is working. Make sure they are in good condition before you turn them over to your buyer. more often than not, business owners deal with the repairs and maintenance before they turn over their assets to their buyers. Why? Because it increases the value of the company as well. Everything should be in good condition if you want the negotiation to go well.

Does the market affect your business’s value?

Yes, the market impacts the value of your business. You also have to check the market. Are there other business owners selling their businesses? Who acquires the businesses? Are smaller companies being bought by the larger ones? With these details, you can easily decide how much to sell your businesses and whether it is the right time to sell. When there is stiff competition in the market, you will be forced to level your pricing at the rate offered by your competitors. if you are not yet willing to lower the value of your business based on the competition, then you can find another time to offer your business. Don’t rush. There’s a perfect time to sell your business so you can get the value of the hard work you put into it.

Ask a Business Broker: When is the Best Time to Sell a Business?