When Should You Sell Your Business?
04.02.19 Part One: Personal and Emotional Issues - Question & Answer #2
Q: When should you sell your business?
Short answer: Sell at the point when you achieve your definition of financial independence.
Longer answer: Timing is everything, these two reasons will dictate “when” you should be looking to sell your business, and those are personal, which are unique and very complex, and then financial reasons or financial independence. From an economic standpoint, the optimal time to sell your business is when that sale will yield financial independence. The definition of financial independence is having enough principal invested to generate annual cash flow that supports the type of life you have always wanted to live without ever having to draw upon the principal.
Understanding that the sale of your business will achieve your unique definition of wealth and financial independence allows you to focus on personal issues. Reduced tolerance of risk and/or burning out are the two most common personal reasons coupled with the ill-fated question of “What will I do after I have sold my business,” that stifles owners to sell. Sell when you can demonstrate that profits and revenues have increased consistently over a period.
Without a disciplined approach to staying on schedule, luck rather than planning may end up controlling when and how much your business will be sold for; buyers are looking for good cash flow and upside potential. If everything aligns to a purchase price that meets your definition of financial independence, then, from an economic standpoint, this is the time to sell.
For the full answer of this question or to request a free copy of “Deciding to sell your business, the key to wealth and freedom,” contact MB Law at Info@mb-law.law.