I use the poker analogy a lot. I’m not actually big for table games, it’s just so apt every time I sit down to write one of these blog posts. Any kind of poker is a game of odds. The question is, are you willing to invest more in your hand then the other people around the table are in theirs. Do you believe that your hand is worth paying for?
You’ve worked hard to develop your business and you’ve invested a lot - monetary and otherwise - into it. Are you willing to continue to invest in your business or are you at the point where you need to begin thinking about cashing out?
The age old, undeniable way to know when it’s time to sell is if someone else is willing to invest more in your business than you are. When you start your business, no one is willing to invest more time than you. You got used to working a 40-hour week by Wednesday and you’ve invested a big chunk of your capital in ensuring its success. In short, the business isn’t worth anything more than what you directly put in. It’s both a stressful and oddly, comfortable place to be in.
That’s because when you’ve been in business for few years and you’re enjoying some success, it can be very difficult to make further investments. After all, you’re making money, your business is doing well and you’re happy. It is...for now.
When you’re no longer willing to invest as much time, energy and capital in your business as the next guy, it’s time to think about moving on. Why might that be and what should you look out for?
If your risk tolerance changes.
This happens as you and your business get older whether you like it or not. You simply are not as willing to risk capital and security for the possibility of increased profits. Fact is, where your risk tolerance ends, someone else's begins. That’s why it’s important to recognize that change and act accordingly, in this case, prep your business for sale.
If you’re looking to invest in other places.
You’ve worked hard to build your business and it’s succeeding. Have you been thinking about other opportunities? Fantasizing about that bait and tackle store you always wanted to open on the lake? Maybe it’s time for a new challenge. Take the capital you’ve built and invest in something new. Something that helps you regain that “investing everything” kind of feeling.
If you’re worn out.
No shame in it. People get worn out, particularly if you’ve been in the same business for years and years. Those 80-hour weeks add up and there comes a time when you have to step back and analyze what’s important. Taking care of yourself and your family is, by far, the most important.
Case Study: Peach New Media
David Will is the founder of Peach New Media, a company that resells web conferencing software. Founded in 2000, David changed his business strategy often, trying out new and different things. After a number of different iterations, he landed on selling learning management software to associations.
This constant iteration meant his business kept growing and in 2015, he more than 40 employees. As his business grew, he became more conservative in his decision making. He received a large, attractive offer from a private equity company and faced a tough decision. Should he sell or keep operating the business he loved.
At the end of the day, he decided to sell. His appetite for risk had dried up and it was either sell soon or risk loss.
Are you facing the same predicament? That’s what we’re here for. ResCon specializes in preparing your business for sale, getting top dollar and helping that sale close. It’s our job to protect you from bad actors. Your business is probably worth more than you think it is, meaning you can sell sooner than you think.