1. Are you mentally ready?
Few entrepreneurs are ever really prepared psychologically to sell their business (except for tech start-ups created specifically with a lucrative exit in mind). The reasons can vary. You may enjoy the business too much. Or you might think you won’t get enough money from a sale. Or you may worry your business can’t run without you.
Whatever the reason, it’s still important to think about the possibility of selling. If you die or have a sudden health crisis, you could put your family in a lurch scrambling to run the business absent any succession planning. “If you don’t prepare, it’s going to be an absolute mess for your family,” Cochrane says.
Succession planning can also help you figure out if you’re emotionally prepared to move on. “Once planning starts, the psychological readiness usually follows. You start processing the fact that you could move on and do something else,” Cochrane says.
Planning can also answer your concerns about generating good value from a sale and keeping the business legacy alive afterward.
2. Are you plateauing?
If your company’s growth has stalled or you feel like you’ve run out of new ideas, this could be a sign you’re ready to sell.
You might be losing your drive to take your company to the next level. Or you may not want to make investments or decisions needed for business growth, such as delegating responsibilities to your team.
Whatever the problem, think about the underlying causes. They may be a sign you secretly want to move on.
3. Is your company ready?
Your company has to be in good shape to attract buyers willing to pay the price you want. That means a history of profitability, a solid balance sheet, lean processes, a good customer base and a plan for future growth.
Buyers also want to know they can run the company without you. For that, you need a capable management team and documented repeatable business processes. Employees must be able to execute the processes consistently without your help.
Also consider external factors that can affect your readiness to sell. These include market conditions and coming changes that could affect your business, such as new technology, regulations or foreign trade agreements.
For more advice, download your free copy of our eBook Business Transition Planning: A Guide for Entrepreneurs.