Many components of our daily lives come with a shelf life, including the perishable items we purchase, like milk, which bears a designated expiration date. Surprisingly, the same principle applies to businesses.
It's understandable that thriving business owners might hesitate to part ways with a venture that consistently yields profits. The question arises: why give up ownership when the enterprise is a steady source of monthly income?
However, in truth, the optimal moment to consider selling a business often aligns with its pinnacle of profitability. Business proprietors, understandably proud of their accomplishments, may be resistant to compromising quality by outsourcing for growth. They push their enterprises to the limit independently, only contemplating exit strategies when growth plateaus.
And here's the crux – there's nothing inherently wrong with this approach. Businesses must evolve continuously to remain prosperous, a fact well-known to owners. When a business owner recognizes that further growth is unlikely under their management, two choices emerge.
Firstly, they can sell to a buyer well-equipped to perpetuate the business's growth. Alternatively, they can persist with the status quo, risking business collapse due to stagnation.
Timing is crucial in successfully exiting a business. Procrastination or choosing to "ride it out" can lead to calamity, jeopardizing owners' potential returns.
Consider this scenario: a business generating £50,000 in monthly revenue hits a growth wall due to limited resources. Competitors, gaining ground, are closing in, threatening to seize market share rapidly. At this juncture, two options materialise:
Option 1 – Sell
Imagine receiving an offer of £1.2m from an equity group or a larger company equipped to sustain growth, potentially leaving competitors in the dust. This strategic move prevents the erosion of market share due to stalled growth.
Option 2 – Ride it out.
Opting to persevere may result in competitors surpassing the business, seizing a significant chunk of the monthly revenue. The business's value diminishes, and the monthly revenue likely dwindles further.
Considering these scenarios, selling a profitable business during a growth impasse due to resource constraints becomes a logical choice. Successful business owners keenly sense this narrow window of opportunity and act swiftly to capitalise on it.
Our advice to clients: if your business is currently at its peak of profitability, it might be an opportune moment to plan your exit. If you're contemplating selling, why not begin with a complimentary valuation?
Click HERE to request a FREE business valuation today!