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 #9: a lack of time and capital to pursue another dream
Are you really doing what you want to be doing? Sometimes it is difficult to step back and put things in perspective because we are most comfortable with the familiarity and security of what we are already doing. Perhaps your business is interesting and produces significant reliable cash flow, but you aren’t really living your dreams. Or even worse, maybe you are bored to death, and long to do something else but you feel constrained by golden handcuffs – you ask yourself what sensible person would exit their stable business for the risk and uncertainty of a new life goal.
However, a sale of your business may provide the capital and time necessary to pursue your dreams. If you’ve built a successful business you likely have developed significant general management and entrepreneurial skills that should increase your probability of success in a new venture. If your dream includes a new business venture, it is important to not only consider what you are giving up in cash flow by selling your business, but also the opportunity cost you are incurring by STAYING in your current business. For example, if your business currently has $700k of cash flow but you believe a new venture will have a high probability of generating $2 million+ in cash flow, then a simplistic way of looking at your opportunity cost is that it would be about $1.3 million a year ($2 million expected minus your current business’ $700k) by continuing on your current path.
Perhaps your dreams don’t include a new business – perhaps they include doing humanitarian work in Rawanda, sailing around the world, or getting a PhD in history. Your most precious commodity on earth is time. Some of your dreams may never be realized if you wait until you are older and not as physically capable or as mentally sharp.
Regardless of whether your dreams are business or personal, it is important to remember that selling your business will likely take significant time. A meeting with a business sale advisor, like Codiligent LLC, may reveal that you will have a better chance of selling your business for an appropriate price if you defer a sale of your business for a year or two while you make some changes. Even if your business is well positioned to sell, it is not uncommon for a business sale to take several months or sometimes even more than a year. Often, after a business sale transaction closes, a seller will need to have at least some limited involvement for a reasonable transition period. Consequently, even if you don’t want to exit for a couple of years, it may be wise to contact an advisor now to start planning for your exit.
