Wed 13 May 2009
Are you ready to let go of the small business you worked so hard to create? Selling a small business can often be a lucrative investment. It might even set you up for success in retirement. Unfortunately, the current economic conditions present some special constraints for small business owners. There are several factors you should consider before selling your business. Take a look at some of these key points, and you might find out that waiting to sell your small business is in fact the right course of action.
Look at the Numbers
In the current economy, businesses are being bought and sold for much less than they are worth. The numbers and statistics speak for themselves. According to the nation's largest website for buying and selling small businesses, the average selling price for small businesses dropped 17% in the last year. The number of small businesses for sale also dropped 8%. If these numbers aren't depressing enough, the fact that the number of small business sold also dropped a whopping 36% in the last year, indicating that people just aren't buying right now.
Look at Industries
There are a select few industries that are not experiencing the effects of the current recession. These recession-proof industries, such as healthcare and certain specialists who contract with the government, are thriving despite the economy. If your business is not in one of these exceptional industries, then in the eyes of potential buyers, the future of it is uncertain. This translates into a lower selling price for you. Subsequently, it is best to hold onto what you have rather than putting it all on the line during a time when investors are only paying premiums for recession-proof companies.
Look at Unemployment Rates
Unemployment rates are a good indicator of the economic conditions and the viability of selling your small business. Unfortunately, the current rates have reached record highs. Not only does this mean that people won't take chances on buying a small business, but it also means that finding a job (if necessary) after the sale of your business will be a daunting task. You may be looking at a significant pay decrease if you sell your business and try to find another job.
Look at Retirement Options
Business owners who are looking to sell their establishments and go into retirement will find that cash flow and revenues have taken a sharp downturn in these difficult economic times. Retirement from small business ownership is often contingent upon the numbers generated from cash flow and revenues, therefore, it is best to be patient and wait for a turnaround before retiring.
If you hold your business through these economic times, then your selling price upon the recovery may be much brighter.