Business Broker | It seems odd but there are various solid reasons to sell a profitable business. These reasons may be financial, economic, or personal.
You may want to pursue a career change, perhaps it is time to retire, or you want to relocate to another location. However, selling a business is not a straightforward job as many people think.
You’ll need a professional service provider such as a CPA business broker to make the transition smooth. Also, you would want to make sure to get the right price for all the hard work you have put into the business over the years.
Top Reasons to Sell a Profitable Business
Unlike the common notion, you’ll get the best price when you sell a business with profits. It does not mean you cannot sell a loss-making business.
However, timing is crucial for selling a business.
Here are our top reasons why people consider selling a profitable business with a business broker.
Restructuring Ownership Model
Many business owners seek ownership restructuring at some stage of their careers. There can be various reasons for it. The most important one is to share the workload and responsibilities of ownership of a business.
At later stages of the career, many business owners prefer to hand over the majority of the shares to a trusted partner. They keep a small proportion of shareholding with them to stay financially stable.
This arrangement allows people to keep the financial advantage while relaxing their job responsibilities. Just as your business broker!
Get the Right Price
As mentioned earlier, businesses get the right price when they are profitable. You cannot sell a loss-making business at the same price.
Selling a business takes time. In many cases, business owners plan a window of two to four years to sell their business. They revamp the business model and achieve profitability.
Achieving profitable figures then becomes part of the plan for selling the business rather than retention. Thus, selling a business at profitability is an important tool in long-term business selling.
All businesses go through a business life cycle. At some stage, the business reaches the saturation phase. At that point, the business growth reaches its maximum.
Smart business owners sell the business when it is making profits and reaches saturation. It does not mean the business will quickly fall into decline mode. However, it will require significant effort to keep the business at the peak stage.
It is important to mention here that businesses can repeat the business cycle several times. They introduce new products, offers, services, and marketing plans to stay competitive and prolong their peak stages.
Finding Another Opportunity with a Business Broker
Many business owners start a business as a hobby. Some of them start a venture to kickstart their entrepreneurship career. Later, they pursue a career change or start a new challenging business.
In many cases, finding an alternative business or career opportunity is a significant reason for selling a profitable business. Unlike retirement planning, this stage is often seen at a young age.
Enthusiastic business owners time their actions to perfection. Thus, as soon as their businesses reach stable profitability, they tend to sell the business.
Owners Need Cash
The prime reason for selling a business is to receive cash. Business owners may need cash for several business or personal reasons. Some of the common reasons include debt settlements, paying for mortgages, buying a new house, starting a new business, and so on.
Turning business equity into cash means selling the business with a business broker. Again, selling a business when it is profitable makes the sense.
Retirement, Relocation, and Health Issues
In practice, selling a profitable business means the owner is retiring. It can be a family ownership transition as well. Either way, when owners retire after a long career, chances are they’ll sell a profitable business.
A related issue is the relocation of the business owners. The reasons for relocation can be various such as finding a new job for the spouse, business relocation, or other responsibilities.
In some cases, business owners can sell a profitable business due to health concerns as well. In the unwanted events of heal illness or serious injuries, business owners also look to sell their businesses.