The sale of a business is often the ultimate goal for business owners. It's important to have a succession strategy and a sale is the most obvious and popular route to go down – many entrepreneurs spend years grooming their business to the point where it is ready for sale.
But before you jump in and sell your business at the first, tempting opportunity, think about the long-term consequences and look at all the available options.
Some business owners end up selling too early and giving away too much of the value of their businesses. This may be because they've been working for years but still have significant financial commitments, such as mortgages, school fees or other debts. Or it may simply be because they're worn out or they've lost their passion and want to finally enjoy the fruits of their labour.
Entrepreneurs are generally a selfconfident bunch and think they can easily do the whole thing again. In reality, people are often unable to repeat their initial entrepreneurial success. Not everyone can be a successful serial entrepreneur.
Plan for your succession
Taking time out to consider succession will free you up for a more strategic role, as well as ensuring the business can survive and prosper without you.
Instead of a sale, the future might be about developing the right successor and changing your own role. Consider promoting yourself from chief executive to executive chairman. This could be with a view to becoming non-executive later on. In this way you can become more of a strategist and can run the board, not the business.
Your experience is valuable, so don't just walk away. You'll have a sixth sense about what is and isn't important in your business, so spend time with your successor and let osmosis take its course.
There are several other possibilities (below) that don't involve an outright sale.
Stay as you are
Staying put may not seem like the most exciting option, but if you weigh it up against the alternatives of selling too early and losing potential value, working for someone else or starting a new business from scratch, it may appear far more attractive than you initially thought. And, of course, if you're profitable, growing and have a great management team, then where better to invest your money than in your own business?
Keep it in the family
Consider your family taking over the business. If you're financially secure, you could continue to own all or part of the business, perhaps remaining in a non-executive role. Alternatively, you could improve your financial security by engineering a family buy-out.
Part-sell the business
Consider cashing in some of your chips while remaining in your role and participating in future growth. A partial sale might be to a private equity house, which would take a meaningful stake, giving some of the cash to you and putting some into the business for expansion.
Float the business
This will not be for everyone, but for strong, acquisitive businesses operating in a healthy economic environment, floating the business may be an option. If your shares are sensibly valued, these can be used as a currency (instead of cash) to make further acquisitions and spur your future growth.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.