Would You Wait For A Product To Go Past Its Used By Date?
Updated: Aug 20, 2019
Most things around us have a sell-by date. The milk we buy from our local supermarket has a date by which it needs to be used.
So why should your business be any different?
We understand a lot of business owners who run a profitable business would be reluctant to sell, because why in the world would you be selling it when you are continuously producing profit month on month!
Well to be honest, when a business is reaching the peak of its profitability is the best time to sell it.
Often the business owner is so proud of his or her business that they don’t want to compromise the quality and risk outsourcing to try to achieve growth, so they take it as far as they can on their own and then entertain exit options when the growth hits a plateau.
You know what? There is NOTHING wrong with this!
Businesses need to constantly grow to remain successful, and business owners are fully aware of this.
So, when someone that has a profitable business notices that the growth isn’t going to go any further under their management they have two choices.
They can either sell to someone that is fully equipped to continue to grow the business, or they can keep doing what they are doing and risk the business collapsing due to the lack of growth.
There is a very limited window of time to successfully exit a business. Delaying or deciding to “ride it out” can lead to a complete disaster, leaving owners at risk of achieving far less.
Imagine you had a business that was producing £50,000 in monthly revenue but you have hit a wall. You have limited resources and the business struggles for further growth.
Looking in your rear-view mirror, you can see several competitors gaining ground because your growth has hit a plateau. They have caught up to you and could possibly overtake your market share FAST. There are two options at this point:
Option 1 – Sell
What if you were offered £1.2m for the business from an equity group or a larger company that had the resources to continue the growth, and in doing so they can pull away from those competitors that were creeping up because of your stalled growth.
Option 2 – Ride it out
If you pick this option there is a good chance that the competition will catch up and pass you, and in doing so they take a large percentage of that monthly revenue away from your business. Now your business is worth considerably less money than it was before, and the monthly revenue will most likely continue to drop each passing month.
When you evaluate the potential risk, you will see that selling a profitable business when the growth is limited due to resources, it makes perfect sense as to why the owner would seek to sell it.
Successful business owners sense that window of opportunity and quickly sell before it has a chance to close.
We advise our clients that if your business is at its peak profitability, then now could be time to plan your exit.
If your in the market sell why not start with a complimentary valuation.