There are many reasons for selling a business. Getting clear about why you (personally) have decided to sell is important, it's not a small decision. For some, gaining insight can help to overcome the desire to sell. For others, it strengthens their clarity and helps them move forward with a prospective transaction.
In the 4th quarter of 2017, the top reason for selling a business was retirement. Burnout was next. Here are the other top reasons...
1. Retirement
The time has come, you’re complete…the Golden years have arrived. You've done it! Now is the time to fulfill your financial plan and capitalize on what you've been working towards. What's next? Another career? Volunteerism? Travel?
2. Burnout
Burnout is fairly common. Career burnout is a chronic psychological condition where you often find yourself tired, in possession of a bad attitude and generally unproductive. This creates or contributes to an unhealthy work situation for all parties involved. This contextual scenario can be addressed but it takes focus, commitment and persistence.
3. New Opportunity
Selling your business to pursue a new opportunity is the second cousin to burnout. New opportunities can "show up" when a business owner is bored and looking for a new challenge. Sometimes, as a result of hard work and building a valuable business, new projects are offered or emerge as a path to the next thing to be accomplished.
4. Financial Reasons
Considering current market conditions, the value of your business could be optimal. A second common reason, tied to burnout, is becoming tired of the ongoing financial risk. Not everyone is wired for the cyclical reality of entrepreneurship. Mentioned earlier, some business owners want to leverage the capital from the sale of their business for their next venture. While this can and does occur, timing can become an issue with this strategy. One other scenario, which warrants mentioning, is the need to liquidate the business due to a divorce. Not an ideal scenario but common nonetheless.
5. Partnership Issues
Most business partnerships, over time, deteriorate. Expectations regarding equity, money or performance, if unaddressed, can necessitate the sale of a business. Often, the partners were never quite compatible and are unwilling to work things out. Operational control, one party wanting to run the business, is usually the result. Partner issues can also arise from liability concerns and the potential negative impact of those concerns on the business.
6. Industry Changes
Every industry experiences cycles including expansion, transformation or decline. As a result, economic, legal and political factors take shape and drive the next phase of the industry's development. The impact of technology has and will continue to play a major part in the frequency of these change cycles. Few business owners proactively strategize their exit (or entry) with market trends and cycles. For those that do, the benefits are significant.
7. Health Concerns
Ideally, our health is a top priority. Sometimes though, as humans, health concerns arise. And sometimes, these scenarios require an extended period of time for recovery or an entire change of lifestyle. As a result, it may become impossible to continue with the (physical, time or financial) requirements of running a business and dictate an early exit. Increasingly, the need for financial resources to assist with care can be a driver too.
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