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 #3: new industry products or services are making your business obsolete
Is there a new product or service that has been introduced by a competitor that over time could make your business obsolete? If so, are there new products or services that you are in the process of launching that will enable your business to be more competitive with your competitors’ market-changing products or services? If not, you may want to consider immediately marketing your business.
Often by the time that a business owner recognizes that new products or services offered by competitors may lead to their business’ obsolescence, the business is already obsolete, it is just taking a bit of time for customers to shift over to the new technology. There is the oft-told, but very relevant, story about the demise of the buggy-whip industry after automobiles replaced horse and buggies. Had the owner of a buggy whip manufacturer chosen to sell their business when the automobile was introduced and there was a low level of adoption of the automobile technology, the business owner likely would have had success with the sale of the business. However, if the buggy whip manufacturer waited until Ford brought mass production and lower costs using assembly lines to the world, it is likely that the buggy whip manufacturer would have had a much more difficult time selling the business for a reasonable price (if able to sell at all). Any buyer for the business would have recognized that over time the industry would greatly diminish.
There are plenty of modern day examples. A couple of years ago I tried to help sell a software development company that had become obsolete. The company produced a niche software, that was very-user friendly and had some unique features which attracted large Fortune 500 business subscribers. However, other much larger software companies continued to invest in making competing products more robust with sophisticated bells and whistles and more attractive user interfaces which made my client’s software far less competitive despite its ease-of-use strengths. By the time the owners of the software development company decided to try to sell the business, they had lost a large number of their clients, and ultimately the business had become obsolete enough and lost enough market share that it was not marketable.
If you suspect that your business may be becoming obsolete and you are not willing to make the changes to prevent this, it is probably time to sell – if it’s not already too late.
