We all had our first-hand experience with a global pandemic last year. Nobody knew what would best work for whom. But, of course, only experimentation revealed the correct course of action.
The same applies to the sale of the business. During the pandemic, many of us encountered financial losses due to which we had to temporarily pause or permanently give up on some of our dreams. And some of us could not help but direct our unused energy towards newer moves in life, i.e., selling the business and adopting a new lifestyle instead.
In any case, the experience of entrepreneurs who put up their business for sale during the pandemic and even successfully sold has much to teach us.
Now, let's have a look at what their experiences had to teach us – what things should one consider when selling their business during the pandemic.
Reasons for Selling a Business
After spending a lifetime building a business, people do come across a situation where letting go of it is the best solution. Different entrepreneurs sell businesses for different purposes. Here is a brief outlook of the most commonly-reported reasons.
Believe it or not, there comes a time when nature won’t let you do something you love. Aging is unstoppable, and everyone will watch their bodies turn fragile day by day.
Well, business requires constant and intensive efforts to keep it operational. Hence, when old, entrepreneurs plan their retirement and sell the business.
Some people do confuse retirement and burnout. However, the fundamental difference between both is of age.
People selling their business due to burnout are in their youth or middle ages. Excessive work and mental exhaustion are the driving factors of business sales by these young entrepreneurs.
It is a commonly-known fact that business requires constant investments. Inputs and outputs are perpetually-existing factors that one cannot eradicate. Hence, when bad times strike, some business owners sell their businesses to cope up with the financial crisis.
Moving to another place and upgrading lifestyle are also why some people sell their businesses. The money gained by the sale can get utilized in several other things, such as property, furniture, or business opportunities.
Things to Consider When Selling A Business
Now, coming to the gist of this post, below you will find the most essential things to consider when selling your business. Note that, since businesses vary in nature and scope of growth with time, not each of the following will be applicable in your case. Hence, you can expect the aspects mentioned below to provide you a lead. You will have to sketch the exact and accurate plan on your own.
Well, as discussed above, one of the primary reasons why people sell their business is that they need money! If you have similar concerns, then you cannot overlook the market condition at the time of sale only to get rid of the business. You cannot afford a bad deal. And hence, you need to ensure that you get the maximum possible financial gains.
For ensuring this, you need to look into current market trends. Check out if the economic stability of your respective industry is at risk or seems to promise a positive growth curve. If you expect a rise, it’s better to hold on and extract the best from your business. However, if a fall or uncertainty seems to be the future, then best sell your business at its current, stable state.
With that said, you also need to consider your business’s financial history before putting it up for sale. Ensure that all previous issues have been settled and addressed. For example, if your business, being fairly new, took a good sum of money as a loan from a bank and still hasn’t paid it back, you might have developed a short-term bad credit loans history. You need to settle this before selling business or you may have no scope of sale at all.
Related: How to Sell a Business With Debt
The future of your business, in terms of family, is an important factor to consider. Before you begin the sale process, evaluate whether someone in your family is willing and capable of handling the business.
One of your children might have ambitions to carry on the business. So, it is better to discuss the matter with the family before finalizing the deals.
Degree of Determination
The sale of a business requires emotional strength and stamina. Entrepreneurs and businessmen experience emotional fallouts once they sell their business.
Emptiness, purposeless, and void are some of the common ones felt by former entrepreneurs. Having led a focused life earlier, giving it up and settling into a regular life can be mentally troublesome.
Perhaps, this is why people should prepare themselves to handle this time before selling. You can design a goals list, join communities, or simply spend more time with loved ones for better handling of this emotional fallout.
Equipment & Investments
Your business must involve some sort of equipment or materials. For example, a salon business must-have shampoo units, products, and several other expensive items.
When selling the business, you have the option to either give it all away along with the business to the new owner or sell it individually. Now, the selection depends majorly on your preferences.
Related: Selling Assets vs Shares
Giving it all to the new owner saves you up lots of time, whereas individual sales can get you some extra cash on hand.
Staff & Team
If you have had a business with team members and employees, then a big responsibility needs fulfillment as the owner. Firstly, ensure that everyone involved in your business has prior notice of the sale so that they can make arrangements. You’ll also have to handle finances, so all dues and payments are clear.
The legal documents will take a lot of time in the business sale process. So, it is better to get started early.
Go through all the property documents, contact a lawyer, and get the official work done with extreme vigilance. The slightest of errors can leave you in huge trouble.
Covid-19, the fatal virus, has had a serious impact on all aspects of life. Things did not go easy anywhere in the world.
Above, we have articulated all the important aspects to consider when selling a business during a pandemic. Using these factors, you can sell your business wisely and efficiently than selling it without any considerations. Remember, knowledge always comes handy.