Selling a business is oftentimes a prime goal of a business owner. The “big cash out” can bring wealth, freedom, prestige and closure. It also can be one of the worst decisions you’ll ever make.
How do you know when to pull the trigger?
To begin, let’s look at the reasons why selling your site or business might come about.
You’ve worked hard, and you’re tired.
The wear and tear of launching any venture is taxing. With the Internet, “business” was redefined. I know starting a website to generate phone calls or leads has a lower barrier of entry than starting a local store. But a business is a business, and you get everything that comes with it.
After a certain amount of time, you may get tired and lose focus. 20 employees, insurance, taxes, payroll and fighting with your competitors tooth and nail – tough stuff. Even if you have a business that’s killing it, the ‘sameness’ of your day-to-day or simply a desire for a new challenge can make you weary of the current venture.
You want change.
Of course there’s more to it than deciding you’ll put a “For Sale” sign up and the buyers will come a chomping. Maybe things are going well, and you just got a call from an interested buyer. An offer was made. It’s for 7x your yearly profits. Killer!
Time to sell? Well, that’s when the gut-check questions start to settle in.
Do you love this business? Where’s it going, up or down? Sideways?
When there’s an offer on the table, or even not, it’s key to project out where your business is heading and the direction of your competitive market. When we sold Show-Me Tickets, an overriding reason was Brant and Brock’s negative outlook for the ticket broker industry beyond 2005. There was consolidation, VC money, competition was fierce, margins were so-so, and legal changes might disrupt the business.
The people who sell out at the top always look smart. But it can be hard to call. Bottom line is you know your business, and should always be considering where it’s going. Cashing out and moving on to something new isn’t bad thing.
Where should you spend your resources – Time, Money.
Looking at moving out of one business, and into another, involves careful consideration of your most valuable assets. Those are time, money, and talent.
Could your team do better in another industry? Do you want to cut the staff from 20 to 5, and run lean at something new? Are you happy with your day-to-day?
That last one is a big one. Many business owners will find that they have lost the love for their business. It’s partly what I mentioned above, about wanting a challenge and avoiding sameness.
You can see and hear the down-to-the-core entrepreneurs never settling for one success or dwelling on one failure, or truly ever putting their head down and ignoring the world of opportunity out there.
You want to drive a Maserati to the bar in Sao Paulo, and sip caipirinhas.
This one creeps in if you’re making big money, and don’t want the responsibility or liability of the business anymore. That, or you just got that killer offer and all you can think about is Tupac saying “I’m seeing money but baby I gotsta get mo’!”
Most business owners have a little slice of wanting to pimp it out and flash their success. Phat money can be fun. And you know, screw everybody who says that it’ll get boring after awhile. So? Then you can start another business, with all that money you just got paid. (Beware: cocaine, yachts, Las Vegas, buying domains while drinking, and bad real estate investments. Set up a separate account for that stuff.)
You have no idea how this happened, and if you can keep up the charade.
Not really joking here. A successful business or site usually takes a combo of a good idea, hard work, and timing. Sometimes timing, or luck, helps out in a big way. How did this happen? If you aren’t sure, signing those sell papers quickly and with a smile might sound like the best idea on the planet. Do it.
There’s all kinds of reasons, and thoughts that stew together into the psychology of selling a business or website. It can be irrational – just look at how scattered the list above is. But it’s your business. That’s why you started it, to be in charge and make decisions like this.
So, is it time to sell? If you’re considering it, make sure it’s for the right reasons, and remember what I said about that separate “fun” account. Keep enough for your next venture. You’ll be back and to the races again some day.
(Next time, we’ll look more into smart ways to make sure you get the most out of a sale. Two words – investment banker.)
Image: Refracted Moments™