Getting The Suitors To Woo You
There are 4 good reasons for selling a business…
- You are approached by a competitor or an investor that offers you an obscene amount of money – in which case you are crazy not to sell, because you can either start another, or buy it back for a fraction of the cost in the future – remember MySpace: sold for $580M; bought back for $35M, not bad for 5-years.
- You are becoming bored with your business and accept that though a good business, new blood and drive is essential its future growth, because your heart is no longer it.
- You have always planned to exit the business you have either started or acquired. Most entrepreneurs seriously consider what the exit route is and when. Venture capitalists that invest in business are always interested in the exit route, as it is when they get the best return on their investment.
- You are retiring from business and want to reap the life-style and prosperity gained from the sale.
There is just 1 bad reason for selling:
- When you are forced to sell, because the business is slowly dying, hemorrhaging cash or you can no longer cover your liabilities or debts. In which case you are in a very unenviable position. Either you will be forced to accept a meager offer that does not value the business or its potential, or you will have to negotiate an agreement with your creditors in the form of a voluntary liquidation of the business. It is no fun at all having to hand the keys to your business over to someone else.
If this situation ever arises on the horizon, then you must take action to sell before the situation becomes dire. Most times, business owners and entrepreneurs think that they can get through, particularly if they can find the financial resources to keep going.
This can sometimes make sense, so long as you focus on reducing inventory and increasing customers with any new finance you negotiate, but if appears – as is usually the case – that you are simply putting more good money after bad – then you must cut your losses, recoup what you can and start again, applying the experience you have painfully learned. Ultimately if your business does fail, or you are forced to sell at a low price, then it is your responsibility.
The good news is that having applied these ideas and strategies, this scenario is highly unlikely to happen to you. So the focus must now be on expanding your business in preparation for selling and developing a plan that will reveal the future potential to attract willing suitors interested in wooing you for your business.
