Top 10 Reasons Why Business Owners Decide to Sell



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There are two types of business owners in this world. One type is a business owner who leaves the business for their children to run and the other type is a business owner who sells their business and moves on. As much as you might want to leave your business to your family, it is probably not a good idea. What if they don’t know how to run your business? What if they have no interest in your business? For these reasons, it is better to just sell your business when you’re ready to finally get out of it.

But, why would you want to get out of your business? Below are the top 10 reasons why business owners decide to sell their business. These reasons are made up of many different scenarios that a business owner might find themselves in. Anyone of these scenarios could happen to you as a business owner, or perhaps it is happening to you now.

Related: What is Your Motivation to Sell Your Business

# 1 - New Opportunities

There are new opportunities in the business world which come up all the time. Whether your current business is successful or not, you might want to try another type of business if you see a good opportunity to get started in it. Before you do, though, you’ll have to sell your current business first in order to finance this newest business venture. Besides, you likely wouldn’t have time to run two businesses at once anyway. It is better that you devote all your time to the new business opportunity that came along and just try to make that the best it can be. Meanwhile, you can sell your current business to a buyer who has the passion to sustain its success and perhaps even make it more successful.

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#2 - Business Growth

A business that is continuing to grow and make money is certainly a business worth selling. Investors and buyers love to purchase businesses that are already making money. That way, after they purchase it, they can just jump right in and take in the profits too. Buyers are usually willing to pay a price that is above market value if they feel the business has the potential to keep growing. As a business owner, you might want to take advantage of this opportunity to sell your business for big money while things are still going well for it.

No one wants to think negatively when they run a business. However, there is always the chance that a growing business could stop growing someday and then start to decline. If you pass up the opportunity to sell your business during the growth period, you may regret it later if things start going badly for the business. You might not want to take a chance on passing up the opportunity to sell if you feel the business could possibly go south someday.

#3 - Buyer’s Market

If the overall national economy is good and consumers are spending money regularly, then investors are going to be interested in purchasing businesses so they can get in on this action. A buyer’s market like this means there’s going to be a lot of hungry buyers out there looking to purchase a business at any cost. In a way, it is just like the real estate industry whenever there’s a buyer’s market. Buyers will pay above value prices for businesses just like they would for real estate.

As a business owner during a buyer’s market, you’ll have a wide selection of buyers to choose from when you go to sell your business. This means you’ll get multiple offers from buyers after you start advertising your business for sale. It may even end up being a bidding war between these buyers, which means more money in your pocket. Therefore, consider selling your business during good economic times.

#4 - An Offer You Can’t Refuse

On rare occasions, a business owner might not even be thinking about selling their business until a buyer presents them with an offer they can’t refuse. This would be an offer out of the blue which is so attractive to the owner, that they can’t pass it up. Such an offer would obviously be priced way above market value for the business. Since these kinds of offers are rare, you probably wouldn’t want to pass it up because you may not get another one in the future.

There are lots of reasons why a buyer would present an offer to a business owner who hasn’t listed their business for sale. The buyer might feel passionate about your particular business and feels they can run it even better. They may also be a competitor of your business and are looking to expand by purchasing your business and merging it with theirs. Whatever the reason is, it will be an attractive deal for the owner.

#5 - Retirement

The classic reason for someone to sell their business would be to retire. Perhaps they spent the last 30 or 40 years of their life running the business and now they want to fund their retirement. What better way to fund a retirement than to sell a business? Even if you already have retirement accounts set aside, selling a business can give you that extra amount of money that you need to pay off your mortgage or purchase a new house to retire in.

The best thing to do is to plan for your retirement. If you just decide one day that you want to retire right away, the present may not be the best time to do so. It depends on the status of your business and how much profit you could make from selling it now versus in the future. If you have a goal amount of money that you need for retirement, you’ll need to make sure that selling your business will help give you the retirement amount that you’re looking for.

#6 - Family Obligations

As much as you may want to devote yourself entirely to your business, your family obligations may also be expanding as well. Let’s say you started your business as a single person but then met someone that you fell in love with later on. If you settle down and have children with your significant other, this will force you to devote more time to your family and less time to your business. This kind of distraction could cause your business to suffer, so you may decide to sell the business and take on a job which doesn’t consume as much of your time.

Video: David C Barnett explains the top 5 legitimate (personal) reasons why people sell their business

Now, this doesn’t necessarily mean that people with families can’t run businesses because they do it all the time. It really depends on how many responsibilities you have running the business versus how many kids you plan to have. Can your existing employees run the business without you being there all the time? If so, then perhaps you don’t need to sell. But if you are a small business owner, then you probably do need to be there a lot or else you’ll have to sell.

#7 - Business Decline

A business owner might want to sell their business if it is already declining. Perhaps they have tried everything to turn the business around and make it profitable, but nothing has worked. The only choice they have left is to sell the business before its value declines any more than it already has. Sure, the business owner might not profit but at least they will walk away with some money to use for personal expenses or to start another business.

You might not think buyers would be interested in purchasing failing businesses. However, buyers see businesses in decline as an opportunity to jump in and turn the business around themselves. These businesses typically sell for cheap prices because the owner wants to get out quickly. So, the buyer purchases the business and then uses their own skills and techniques to try and make it profitable again.

#8 - Bad Location

There are a lot of factors that make a business successful. The location of the business certainly has a lot to do with it. When you first start a business and decide on its location, this might be a location that was thriving for your industry at the time. Unfortunately, things can change over the years which affect the location of your business. Perhaps there is a higher crime rate in your area and your ideal customers no longer want to shop around there. It could also be that the overall economic status of your local area has declined. So now, people are not shopping as much.

When your business is faced with a troubled location, there are only two options. You can either try to relocate your business or you can sell your business. Relocating your business would be a nightmare because you must lay off old employees, hire new employees, lease or purchase new commercial property, find new suppliers, and find new customers. With all this in perspective, it would be a much better option to just sell your business and then establish a new similar type business somewhere else.

#9 - Bad Personal Health

Sometimes in life, there are personal situations pertaining to health in which we cannot control. You may not want to sell your business but that doesn’t mean that you won’t someday. If you find out that you’ve got cancer or some other terminal illness, then you’ll have to prepare for getting out of the business before the serious symptoms of the disease start kicking in. There’s no sense in trying to run your business while you have a disease because your performance will end up lacking and then your business productivity will suffer as a result.

The best way to get out of the business would be to sell it while the business is still valuable and running smoothly. You don’t want to wait until you’re physically or mentally disabled from the illness because then your business will instantly suffer from this. Then you’ll have virtually no chance of selling your business for a good amount of money if it’s already declining. Therefore, sell your business after you just find out about your illness. Use the profits to pay for your medical expenses.

#10 - Boredom

A business owner may get bored doing the same thing every day. Even if they are making money at their business, the owner may still want to try something new. It takes a lot of willpower to run the same business for 10, 20, or even 30 years. Maybe they never anticipated on running a business for that long. On the other hand, they could also be a new business owner who has only been in business for a couple of years and doesn’t really enjoy it all that much. No matter what the reason for their boredom is, they might decide to sell their current business and then try to run another business that they’ll have more interest in.

Remember that if you don’t have an interest in your business, then you can never succeed with it. So, if you lose interest in your current business, then you should sell it soon or else your lack of interest will reflect on its productivity and profitability.



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