Entrepreneurs, no matter how successful they become, can still grow tired of their business. Managing a business barely allows for breaks, after all. Not to mention its risks never go away.
To retire from entrepreneurship, owners may sell their business to a bigger corporation. This preserves their brand even if they’re not running it anymore. It could also grow the business even more because its new owners have better resources.
If you’re also thinking of selling your business, not because of your retirement plans, but rather because it’s losing sales, you may face challenges before finding a buyer. For one thing, a buyer may offer a price way lower than you expected. That’s because buyers are looking for stability, and growth, as a bonus. Since your business has neither, a prospective buyer won’t place much value in it.
But of course, you don’t want to let your business fall apart either. It may have failed, but its fate won’t change the fact that you worked hard to start the business in the first place. So before giving up and passing the throne to another owner, consider the following first:
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Can You Get Back Your Lost Sales?
All businesses go through a tough time. Just because you’re not selling well now doesn’t mean it’ll stay that way for good. If you can still revive your struggling business, assess how much it’ll cost you. Determine how long it will take as well. If you can dedicate a whole year to recovering your lost sales, take the chance, unless the risks weigh more than the potential rewards.
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Identify All the Reasons The Business Declined
When you start meeting with prospective buyers, they’ll want to know what made the business decline. Be honest and point out each reason. In fact, identify them before your meeting. Doing this will give you the chance to think about what you should’ve done differently. List down the strategies that might’ve saved the business, because that will be a useful document for prospective buyers.
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Be Willing to Accept a Low Purchase Price
If not a low purchase price, be willing to accept a performance laden deal. The latter may come in the form of an earnout. In addition, any deal will likely involve seller financing, unless you want to sell your business for an all-cash deal, which rarely happens.
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Don’t Oversell
Humble yourself and accept that your business’s decline is a result of your wrong decisions. As such, you have no reason to oversell it. Even if your intention is to revive the business, the hard work will come from the buyer anyway, so it’s unfair to expect yourself to overly benefit from the sale.
Positive Reasons to Sell a Declining Business
There’s hardly anything positive in admitting that your business has failed. But if you manage to sell it to a better owner, then you’d also reap amazing rewards from it, even though they’re not business-related anymore.
If your business has failed, chances are it has caused you to fall into personal debt. Thus, selling your business will give you the funds to pay off your creditors. That’s two sources of stress eliminated at once. Your business is saved, and your debts are cleared.
Selling your business also allows you to expand professionally. Just because you’ve given up on one business doesn’t mean you can’t be an entrepreneur anymore. Look at doctors, for example. A specialist — let’s say, an audiologist — can actually sell their practice to hospitals or venture capitalists. They do this to boost the value of their practice and increase their earning potential. Selling their audiology practice also gives audiologists the choice to remain as an employed physician, despite their practice having a different owner. This is to ensure that they can maintain a generous take-home pay because hospitals sometimes do a weak job of collecting bills.
Therefore, when you sell your business, you’re also giving yourself a chance to restart your entrepreneurial career. You can start a new company in a different field, but still something around your niche. Unlike doctors, you can’t really maintain the same “practice” or field as your old business, since it’d be absurd to become your old business’s competitor. But the point is, it’s not too late to redeem yourself as an entrepreneur. Explore other fields or markets, and this time, don’t repeat the same mistakes you did with your former business.
It’s absolutely fine as well if you’d chose not to become an entrepreneur anymore. You can always redeem yourself in other ways, like supporting a charity, or venturing into a field you’re passionate about. If your goals for selling your declining business are for the greater good, then you’re making the right decision. After all, it’s not always the amount of money at stake that determines such.