People become entrepreneurs for a variety of reasons. Maybe you just stumbled into starting your own business when you built a blog that started making money. Or maybe you inherited a family business, or started a business intentionally. Whatever your reasons for starting and running a business, it’s a good idea to consider your exit strategy right from the start.
If your business is even a bit successful — or has the potential to be successful — you could potentially sell it. It really all comes down to what someone is willing to pay.
Maybe this is your goal from the beginning. If you love the start-up phase, you might build a business so that you can sell it before moving on to the next thing. Or maybe you think you’ll never sell your business. But there are plenty of reasons owners eventually decide to sell. Understanding those reasons up front can help you make good choices if you ever come to the crossroads of possibly selling your business.
Here are 11 common reasons business owners decide to sell:
1. It takes too much commitment.
Businesses are always a big commitment. But sometimes taking things to the next level, requires more time or effort than you’re willing to put in. Maybe you’ve reached the original goals you set for your business. Or maybe the business became more than you ever planned, and now it’s too much to maintain. Sometimes, you just decide you need to go a different direction with your life, but you don’t want to let your employees and customers down by shutting down your business.
There’s nothing wrong with deciding that keeping your business growing requires too much effort. This is especially true if you want to sell the business so that you can focus on another area of your life, whether another business, your family, or personal development. Of course, you could just decide to reap the final financial benefits of your business and retire.
2. Too much is at risk.
You might want to move on from your business if you have too much on the line, either personally or financially. In some businesses, or at some time periods, there are too many random forces at play. If the economy is changing or, for any other reason, you can’t easily maintain your revenue, you may feel uncomfortable maintaining your business. This may be especially true if you, personally, or your business can’t absorb the high level of risk.
Chances are likely you can find a buyer for your business, who can handle the volatility and risk associated with your particular business. In that case, let them take on the risk while you move on to something less volatile.
3. The market isn’t favorable.
If you’re in a rapidly-changing industry, like technology, you need to be able to read and react to market trends quickly. Otherwise, your business could become irrelevant. If you don’t have the skillset to adapt your business to align with the current market, now may be the time to sell. Again, another business owner may have the skills and energy to deal with the changes in the market.
4. You’re interested in another investment opportunity.
Owning a business is often a result of your passion, but it’s still an investment. You’re investing your time, money, and effort. And that investment always comes with an opportunity cost. Because you’re putting your energy and money into this business, you’re effectively saying no to other opportunities.
But what if another opportunity comes along that seems like an even better option than your current business? Maybe this opportunity comes in the form of a new business venture you’d love to jump in on. Or maybe you just find that your business’s growth rate will slow down. In some cases, you could be better off financially by taking the money the sale of your business will generate and investing it in the stock market.
5. There’s too much competition.
If you’re an innovator in a developing industry, chances are you’ll find your niche — at least for a while. But your innovation could take you down one of two paths.
On one path, outside investors are interested in your innovation. They want to put money into your business because they think they’ll see good returns from that investment. But the second is that others see what you’ve done, start imitating it, and get investors for their own version of your business.
A little competition isn’t necessarily a bad thing. But if the market gets too competitive, it may be time to move into something new.
6. You’re stifled by regulations.
Industry and government regulations are just a fact of operating a business. If you don’t want to play by the rules, don’t start a business.
If you’re paying close attention to your industry, you should always know when new regulations are about to come down. You should be prepared for new regulations and ready to adapt. If this gets too tiresome, though, you may find yourself wanting to sell your business to someone who can better handle the rules and regs.
7. You need the capital.
Sometimes selling your business isn’t actually about your business. Not all business owners are millionaires. In fact, many don’t pay themselves a good salary, especially if they’re in the start-up phase. If you’re starting up your business, you might reinvest all your profits and take no salary at all. Your share of the company could be enough to compensate.
But there may come a point in your life when you need the capital. Maybe you just want to retire without financial needs. Or maybe you have a pressing need for cash to cover an emergency. Although it can take a long time to sell a business, this can be a way to generate some capital when you need it.
8. You can’t agree with your partner.
When you have a business partner, sometimes it’s all fun and games. And then sometimes, things just don’t work out. If you and your partner have serious disagreements — either personal or business-related — selling could be the solution. That way, you can both get out of the deal with some cash in hand to start a new venture.
This, by the way, is one solid reason to be sure you have all the legal issues with a partnership worked out before you start a business with another person!
9. You’re burnt out.
Many business owners wind up selling a business due to burnout. Running a business is tough. It often means long hours, learning on your feet, and maybe not bringing home a lot of money. And the problem is that the bigger your business grows, the worse some of these issues become!
After a few years of this, some business owners can’t take it any more. And that’s perfectly okay. If you’d rather go back to the gig economy or become an employee again, selling your business can be a good option. It’s better than just shutting down, especially if you can get some of your money back out of the business.
10. Selling was always the plan.
Some people are just made to be serial entrepreneurs. They ride the thrill of coming up with a new idea and bringing that idea to life. If you have the knack — and the stamina — for this type of life, maybe selling your business has always been your plan. You like to take things through the start-up phase, but then let someone else handle it from there.
If you’re successful with these tactics, you can be really successful financially. Each time you sell the business, you gain capital to invest in your next venture, plus some profit to pad your own bank account. Then you can more quickly start up the next business with your greater amount of capital. String together a few of these sales, and you could be looking at a sunny financial future.
11. You get an offer you can’t refuse.
Maybe a buyer just falls into your lap one day. You’re not looking to sell your business, but a motivated buyer is offering you well beyond what you think it’s worth. If this happens, you can do a couple of things.
One option is to take the money and run. Maybe you didn’t realize until now that you do have other dreams you could accomplish if you could sell your business. In that case, if you’re getting a good deal, sell the business and start something new!
But the other option is to try to see what your potential buyer sees that you don’t. If they’re offering you a load of cash for your business, they’re clearly seeing something that you don’t see. Redouble your efforts to grow your business, and just see what you can do!
Have you ever sold a business? What were your considerations when deciding to sell?
Updated August 18, 2017 and originally published September 10, 2013.