Not everyone wants to sell their business. For some that’s a ‘not now’, and for others, well, maybe never.
We continue to look at reasons entrepreneurs DO exit their business, but it’s equally important to understand why they might not, at least not yet.
The Not Nows
There are a number of perfectly good ‘not now’ reasons, including:
The need or want to continue to make a regular income. If your business is capable of paying you a solid income, you still have a long time before you retire and maybe you can’t face the thought of starting all over again. This is a perfectly valid reason but should be weighed up against how much it is worth if sold – as well as against other options. If, for example, you would like to step back rather than sell, promoting or putting in competent management may work for you instead of sale.
It’s not worth enough – too small, not profitable enough yet. Strong self-belief is common among entrepreneurs, and the belief that a business hasn’t yet reached its full potential can block any thought of selling. In this instance, an entrepreneur should be focused on what their number is – what are they aiming for – and how to achieve that. We’ll talk about that soon.
Loyalty to existing staff. When you’ve had the backing of a great team as you built your business, it can be hard to take action that may leave them vulnerable to any changes a new buyer may bring. If this one really is the dealbreaker when making decisions about selling, then perhaps thinking about offering an MBO is an option.
This theme is expanded in worry about the ‘wrong’ buyer. Not just wrong for your team, but maybe a buyer who wants to take your business in a direction you don’t agree with, or one you don’t believe will work – the thought of someone running your carefully built business into the ground is hard to take. If this is the only thing holding you back, then don’t worry, you have time to pick the right buyer – or again, perhaps an MBO.
Family handover can be a powerful disincentive to sell your business. Pressure to preserve a company to pass it on to the next generation can be hard to resist. However, before you accept this as a given, it is worth exploring where that pressure is coming from, and whether that’s enough – we’ve seen too many businesses struggle with intergenerational handovers, expectations and disillusionment not to recommend a deeper dive. Do your children really want to take the reins, or have you always just been expected that they will? Are you confident that they will enjoy and make a success of your business like you have?
No-one should ever be pressured to sell their businesses, but at Exit Motivations, we believe that entrepreneurs should fully understand their options before making a decision to sell or to hold.
We will blog in coming weeks about the magical number at which an entrepreneur starts to think about selling, and about other factors in when to jump.