Being a small business owner can involve making many tough decisions. One such hard decision can be whether you should sell your business or close it when the time comes to retire or change your career direction. While the decision can be clear-cut for many business owners, it isn’t for all. However, you may find the decision-making process easier by considering these factors:
Financial Viability
A business’s financial viability can be a deciding factor in whether you close down your business or put it on the market. Consider meeting with a business strategist who can help you form an exit strategy and shed light on your business’s potential.
With their help, you can learn whether your business has growth potential and could enjoy enhanced profitability with the right resources and a new owner. Experts in this area can also guide you through the closure process if that ends up being the best option.
The Market Conditions
Market conditions can be just as important as financial viability. While your business might be turning a profit, that doesn’t always mean you’re in a favorable market. Consider how much demand there is for your business and let that guide your decision. If there’s still demand for a business like yours, selling can sometimes be a wise choice. If you’ve noticed a steady decline across all companies like yours, you might decide to close your doors permanently.
Your Goals
What you intend to do once you’re no longer a business owner can sometimes guide the decisions you make for your business. Business owners who want to minimize their financial obligations may see closure as the cleaner and more final option.
However, selling your business may be more desirable if you’re retiring or want to seek other business opportunities. Any money you make from a sale can go towards a comfortable retirement or new business venture.
Potential Buyers
Putting your business on the market may not make much sense if you can’t identify any potential buyers. Take the time to brainstorm who may like to take over a business like yours to help with any marketing materials you create for a sale.
Competitors, investors, employees, and first-time business owners are just a few of the many possible options to explore. If you can’t see how any of these parties could operate your business successfully, selling your business and equipment may be the most viable option.
Debt Levels
While debt in business isn’t uncommon, your debt levels may guide your decision. Substantial debt may mean that closure is your only option. You can sell your plant and equipment and hopefully retire with minimal business debt to your name. Closure can often be the most fitting option if the total debt amount exceeds your business’s value. Alternatively, you might consider paying off debt before a sale or transferring it to a new owner if the purchase price reflects your liabilities.
Knowing whether to sell or close your business can be a challenging decision to make. These factors above are just a few of the many that might help you make your decision more confidently.