When Is The Right Time To Sell Your Family Business

When Is The Right Time To Sell Your Family Business: Essential Tips & Strategies

Why Hiring a Phoenix Business Broker Is Crucial For Selling Your Family Business

If you own a business, it is likely that you are hoping to sell or transfer it one day so that you can retire using the funds from the sale. Or maybe some other factors are playing into the decision to sell. In either case, it is important to prepare ahead of time by evaluating business performance, looking at current market conditions, and more.

So how do you know when to consider selling your business and involve a Phoenix business broker? The following blog will help you take the first steps to understanding a path forward.

Is It the Right Time To Sell Your Family Business?

There are a few different signs that may point you towards selling your business. For some, their personal lives are the driving factor. For others, the current market conditions are in their favor. For many more, it is a combination of both.

When it comes to personal reasons, you may be experiencing the following which can be a sign that the time to sell is near:

Burnout, loss of passion, or lack of motivation.
New goals may present themselves, and selling may allow you to focus on other opportunities.
Health or lifestyle could be making it hard to dedicate time to your business.
You may have a debt that your business sale could help pay for.
Selling may allow you to create a nest egg for retirement.

For some business owners, they may take a look at the current market conditions and decide that now will provide the most competitive pay. Or maybe the economy is strong and it seems higher valuations could be made. In these cases it is essential to reach out to a Phoenix business broker.

Another important factor apart from market conditions and personal reasons is evaluating your business’ performance. Your business is more attractive to buyers if it is profitable and has steady revenue. If your business is doing well and is at its growth peak, you should consider selling before things change.

What Challenges Do Family Businesses Face In Deciding To Sell?

Deciding to sell is not always as simple as taking a look at your situation and saying yes or no to taking the step. There can be challenges that present themselves making the decision more difficult. The following are some challenges you may face:

Family Dynamics

If you own a business with your family and family members are involved, they may expect, or you may choose to pass down the business instead of sell. However, sometimes this can cause conflict as some individuals will want to take over the family business while others may want to sell. You will have to decide what your goals are for the future of the company and a Phoenix business broker can help you see past this challenge and into the future.

Considering Emotions

You put a lot of time and effort into your business so when it comes time to consider selling, you may feel a lot of emotions. Because of your hard work, you will likely feel attached to the business, making it feel like you are losing a piece of yourself. Additionally, some people feel guilt when it comes to letting go of employees or loyal customers. While these emotions are not bad and are the sign of a successful business, they can pose a challenge when it comes time to sell.

Challenging Business Factors

Other challenges may will present themselves can include:

Waiting too long to sell so the market for your industry is reduced
Not having strong profits, growth potential, and clean financials
A disagreement in how much the business is worth between buyer and seller
Being unsure about whether or not your business is truly at its maximum value

How To Maximize Your Business’s Value Before Selling

So if you’re considering selling, you may wonder what you can do ahead of time to make your business more valuable. This is where a Phoenix business broker can be especially helpful to your specific situation. Some ways to maximize the value include:

Improve the efficiency of your work

Hire a professional to look for bottlenecks or redundancies and implement solutions to these areas.
Consider updating technology and potentially using automation in areas that allow for it.
Ensure your employees skills are up-to-date and efficient by providing ongoing training.

Streamline your finances

Have a system set up that regularly reviews your expenses and identifies unnecessary costs.
Negotiate with suppliers for better deals on bulk or discounts.
Follow up on overdue accounts receivable.

Make your business look more attractive

Create a strong online presence with attractive social media and website content.
Offer top-notch customer service so that you have a strong reputation.
Be willing to embrace change and consider introducing new products or services to keep up with the market trends and the needs of your customers.
Make sure your financial records are well-organized which can make potential buyers more confident.

Common Mistakes To Avoid When Selling a Family Business

Selling a business can be stressful and there are several common mistakes that business owners make which can damage the value and attractiveness:

Incorrect Valuation: Some business owners rely on their own guesses or even use outdated methods to assign value to their business. This can lead to undervaluing or overvaluing. It is helpful to hire a professional Phoenix business broker to come up with an accurate valuation.
Lack Of Preparation: Proper preparation is essential to selling a business. Some owners start preparing years ahead of time by making their business more efficient, solving legal issues, and addressing poor financial controls. Lack of preparation can be a red flag for potential buyers and can lead to lower offers.
Poor Books & Records: Good Books & Records are essential to get top dollar for your business. Buyers will usually request copies of your last three years business tax returns, profit & Loss statements, and balance sheets. Not having these items will reduce the attractiveness of your business and may make it impossible to sell.

If You’re Thinking Of Selling Your Phoenix Business, Involve Our Business Brokers To Ensure Success

Selling your family business is a big decision which takes planning and a proper valuation. Phil Reese is a top-rated business broker in Phoenix who has years of experience and dedication to his clients. As one of only nine business brokers who hold the Certified Business Intermediary designation in Arizona, you can be sure that your family business will be in good hands.

Reach out to our team today to see how we can make the transition out of your business a success.