Time your sale to hit jackpot
TIMING is everything in business and always will be.
Every business owner will one day exit his or her business by selling it, gifting a son or daughter or closing the doors.
Obviously selling it is the preferred option but when to make the decision can often have a huge effect on the eventual price you achieve.
In an ideal scenario the perfect time to sell a business is exactly when the owner chooses, not when circumstances demand a sale.
The next important factor is the market for businesses at the time you sell.
Ideally, the market for businesses in your particular category will be hot, which means there are more buyers than sellers.
This only happens when we have booming economic conditions similar to the mining boom we recently experienced.
The third factor is the performance of your business in the preceding three years.
The perfect scenario is for your turnover and nett profit to show a strong and steady increase with a clear vision of where the next owner can continue to grow the business.
If there is no perceived potential to grow the business, buyers won't be persuaded to pay a premium.
If you can time your sale to include these important factors you will hit the jackpot.
Naturally, finance will need to be easily obtained for a qualified buyer.
As we are now experiencing, banks are looking very favourably on business purchases, unlike a few years ago.
We have all been warned that the Australian population is rapidly ageing and that baby boomers are going to be retiring in large numbers in the coming five to 10 years.
What that means is that there will be an increasing number of businesses being brought to the market.
In this situation the buyer has more choices and is therefore more selective and demanding.
And the large number of choices will soak up what few buyers there would likely be for your business.
Consequently, we would encourage prospective sellers to seriously consider selling their business in the current market rather than delaying it and risk being lost in the pool of businesses for sale at a later date.