A record amount of entrepreneurs will decide to sell a business over the next decade. If you’re one of the business owners looking to monetize your life’s work, you may be in for a rude awakening.
Nearly 75% of the businesses that will go to market will fail to identify an ideal buyer. That’s a lot of time, effort and energy put into something that is so important – only to have nothing to show for all of your troubles.
There are thousands of reasons why businesses fail to sell when they go to market, and our team at Vesticor has helped clients navigate through these rough waters. But, in order to start your exit journey off on the right foot, there are two very critical questions that can easily determine the likelihood of a successful exit strategy. We thought it might be helpful to share them here.
Why Do I Really Want to Sell My Business?
We have witnessed every possible reason why entrepreneurs want to sell their businesses. It can be for health, retirement, travel, changes in the industry or countless others. But, there is usually one main reason that every business owner can lean on to keep them focused on the prize at the end of the journey.
Having a constant reminder of “why” you are selling the business is extremely powerful, and the science behind having this vision is tough to challenge. The motivational energy needed to work through rough periods (that come with any exit strategy) can be strengthened by understanding what drives your desire to sell now.
In a recent transaction, our client (a serial entrepreneur) wanted to sell a business because he desired more time to spend with his other company. This business was growing rapidly and had tremendous upside potential. He needed to devote a full-time effort to this growing business if it was to succeed to its fullest potential, and he needed to sell the business that we represented. The “why” for him was to free up his time to build something even greater, and this motivation gave him the strength to power through a couple of obstacles and roadblocks that came along with the transaction. We were able to find a large strategic buyer, and he was able to devote more energy on a business that gave him more excitement.
Knowing your “why” will fuel ambition and inspiration around the one thing that is the most important to you, and will help move your transaction forward.
What Will I Spend My Time Doing After I Sell My Business?
When someone comes to us for the first time, we like to ask them to share their vision of what an ideal day would look like after they sell their business. The answers are a clear look into what motivation they have to make the commitment to sell in the first place.
We just finished representing an owner who spent the last 20 years building his business to a top spot in his industry. He worked hard for this position, but couldn’t stop talking about moving to a warmer climate and spending time with his wife on their new boat. He went into great detail on what his ideal day would look like out at sea, and we knew that he was ready to make the commitment to meet with our buyers.
The main reason that most businesses fail to find a buyer is because the seller is missing some type of motivation to make it happen. A seller that lacks the proper motivation to work toward closing the transaction will likely never get to experience the thrill that comes with selling something that they built with their own hard work and dedication.
If you cannot get really motivated by the wealth and change of scenery that will come from selling a business, then chances are that it’s just not the right time to sell.
The process of selling a business can be a ball of emotions all rolled into one experience. If your not truly motivated to move onto the next chapter in your life, then buyers will sense this lack of motivation and they will move onto another business.