There are a variety of conditions that may indicate that it is a good time to contact a business broker to explore exit strategies. This blog post is part of a series about signs or indicators that it may be time to consider a business sale or exit.
Sign it is time to sell your business #2: failure to upgrade technology
Sometimes I encounter business owners who see their competitors upgrading technology but choose not to do the same. Often the argument for not upgrading is that “we’ve been successfully operating for the past 20 years – why change something that isn’t broken” or “upgrading technology will require a large investment of time and money and I don’t think it will be worth it” or “it’s probably a good idea, but I haven’t had time to look into it and I don’t know when I will.”
While certainly there is risk associated with implementing new technology, and I’m not advocating that a business owner should be a lemming when it comes to new technology, there is a very real danger to the marketability and value of a business that doesn’t keep up with technological changes.
For example, if an investment of $500k in a new machine will enable your business to generate $100k in additional cash flow per year, not only will it pay for itself quickly, but it will also add value to the business through the additional cash flow it generates.
While it is true that some buyers like to find businesses they can fix, there is a very real danger that by deferring the use of new technology for too long that you will find your business eroding as others in your industry use technology to become more competitive by delivering greater value and efficiency. Once your business begins to decline there will be an erosion in value and marketability that may be difficult to recover from in a short period of time.
There are many reasons you may choose not to keep up with technological changes in the industry, but if you are at that point, you may want to talk with a business broker or investment banker to discuss whether it may be a good time to explore a sale of your business.
