Should you Start Selling a Business in this Economy?

Selling a business for whatever reason is affected by the current economic status of a business community.  Whether a business owner should start selling now depends on the reason and the gains he or she expects from the sale. This article discusses the issue further.

Even if you have planned and scheduled your exit strategy, there is still one factor that you cannot possibly foresee accurately - the economy.  For a small business owner, the business mindset is usually focused on the local or the immediate market.   But when you decide to sell, the scope of concern and prospects gets wider.  However, the economic health of a business community is only an important factor if you wish to sell at a profit.   Otherwise, if your goal is simply to retire and have just enough then price, buyer profile, employee welfare and the present economy are not main considerations.   In this case, anytime is the right time as long as the sale is completed immediately.

 The present economy is also not a factor if you are selling a business that you wish to continue and flourish.  In this case, the buyer’s profile is more important than price and the time element.  In situations like this, the right buyer would most likely be from within the business.    In short, the reasons for selling a business dictate the factors that matter, whether it is price, time, economy or buyer profile.  And the only time the current economy is a concern is if the seller wants to dictate the price and terms of the sale.

In a healthy economy, banks are more confident in lending money.  The creditors who are subsequently the investors or your actual buyers are most likely to have higher budgets.  But in a struggling economy, it’s usually a buyer’s market.   This is when there are a few buyers and more sellers.  The buyers have more options so they dictate the price.  You can raise your list price as much as you want but when the negotiations start, prepare for some serious bargaining.

The economy is in the state of recovery and small businesses are booming.  And if you are thinking of selling a business now, you’re chances to sell profitably will depend on the preparations you make.

Presentation is key.  Work with a business broker who understand your industry and work on improving your cash flow, your financials, your marketing plan and your business plan.  Make changes in key operations if necessary.  Remember that your business should look good for your buyers and their financial backers.

In the end, the outcome of selling a business does not entirely depend on economic status but on how prepared the business is for the buying market.