Small Business

Five Major Reasons Small Business Owners Sell Their Companies

Every year, more than 30,000 small businesses get listed for sale in the UK. Although it may sound like a small number right now, when you are one of them or maybe planning to become one of them, it suddenly becomes the biggest statistic in the world.

More often than not, small business owners plan to sell their company because they fail to make it financially stable. There are various reasons that can lead your company into cash flow issues. But if you take corrective measures and implement cash flow management early in your business infrastructure, it helps you not only avoid cash flow issues, but also effectively manage your finances.

However, if you are still falling short on funds to run your business operations, you can opt for cash flow finance – a funding option made available for companies suffering from cash flow issues.

Although in some cases, some unavoidable and unfortunate events force you to sell your business. Hence, it is always better to optimise your price by timing your sale for your advantage where possible.

Following are five major reasons that trigger the sale of a small business.

1: You Are Getting a Great Offer

Let’s just say, if someone is making a hard-to-ignore offer to buy your business, will you refuse it?

Most business owners are caught up in such a situation where they find it hard to refuse an offer made to them and end up accepting it. This is despite the fact whether they have been running the business for years or just for a while, whether they are young or old and whether they have plans for the future or not.

So if you get caught up in an enviable situation, it is best to evaluate the offer carefully before you jump to any decision. There are several ways of valuing a company, methods that are especially based on numbers. However, it is advisable to seek guidance from your financial advisor and lawyer and make sure whether the offer is worth the company’s current financial position.

2: You Want To Retire

Retirement is one of the major reasons why most business owners sell their business. This tends to occur at different ages for different owners, as most of them usually wait until they have reached their full retirement age for social security benefits.

There are few people who run their business with utter joy and pride. They don’t plan on giving up their company until their health degrades or death forces them to do so.

3: You Want To Jump On a New Business Opportunity

You might have come across serial entrepreneurs – people developing business ideas one after the other. For serial entrepreneurs, it is the process of developing a business and not actually running it that gives them charge. For most others, profit earned from one business makes it possible for them to develop bigger and better things. Selling companies gives a serial entrepreneur the capital amount, experience and time to develop a new venture altogether.

4: Health & Family Issues Come Up

Unfortunate events come upon uncalled. Anything health or family issues can force people to sell their business in order to look after their personal issues. So, if you happen to sell your business under any such circumstances, first make sure whether the situation demands a permanent exit or is manageable by taking temporary leaves.

For instance, disability insurance covers business owner’s living expenses while they are away from the company. However, if the company’s success is completely dependent on the owner’s talents, a little time away from the company can affect the company adversely. Selling the company while it thrives becomes a sensible choice.

5: The Owner Has Died

When the business owner dies, either the family members are unwilling or incapable for running the business. For instance, a florist dies and their spouse who inherits the business has no idea about flowers or maybe has no interest at all in running the company.

In such a situation, the owners’ heirs get to decide whether they want to sell the business or not. Some of the post-deaths sales are prearranged through agreements.

In most cases, the business partners end up buying the deceased owner’s share in the business.

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