Have you ever wondered when the perfect time is to call it quits on your business? Just like in a dance where every step matters, the success of your small business exit hinges on impeccable timing. Let’s dive into the signs that guide you to the perfect moment to say goodbye to your business and hello to your next adventure.
When it comes to Exiting, Timing is Key
Starting, building, and scaling a business is already hard enough, and knowing when to exit is the ultimate challenge. So, for you to make all the right moves at the right time, here are 4 takeaways that will get your exit just right.
Takeaway 1: Follow the Money Trail
Understanding your business’s money story is crucial – know how much money you’re making and how the market values your small business. Look closely at your revenue, your EBITDA, your prices, and how they are trending. They’ll tell you when it’s a good time to sell. To stay in the theme, your business’s financials compose a symphony, and each note is crucial in deciding when it’s time to step out.
Exited freedompreneurs will advise you to dive deep into your numbers:
- Don’t just look at your annual report – understand the story your money is telling.
- You might think the best time to sell is when your business is growing. But Ian Schoen disagrees with that in the book Before The Exit by Dan Andrews. “It’s best to sell when a business is leveled out, or growing just slightly – single digits per year. Or when it’s tanking because then (buyers) feel like they’re getting a good deal.”
- Seek advice from financial experts who help you decipher the rhythm of your financials. This isn’t just about understanding your current numbers. It is also about knowing the work you still need to do to turn your business into a sellable asset.
Takeaway 2: Feel Ready to Exit
Besides the numbers, your personal feelings are crucial. If your business is not making you happy anymore, it might be time to step out. The emotional journey of entrepreneurship is as crucial as the financial one – listen to your heart; it will signal that it’s time for a change.
Look at Maya, a successful entrepreneur making around $1.2M a year. Despite this financial success, she felt unfulfilled. What once started as a passion business supporting her lifestyle, now turned into a golden cage. Her choice to sell wasn’t just about the final paycheck but about her desire to feel content again. Her story teaches us that the right time to exit is when your heart indicates it’s time to spice things up.
Takeaway 3: Sharing the Same Values
The sweet spot of exiting is when the numbers and your feelings are in harmony and when you know who to pass the torch to. Being clear on your values makes selecting a buyer easier.
In my journey as a serial freedompreneur, the question of when is the right time to sell hit me three times. Each exit wasn’t just about the cash. It was about me wanting to entrust my legacy to a buyer who matched my values. When I sold, it was the culmination of years of fulfilling work, a deep sense of accomplishment, and handing over the business to a buyer who could honor the clients and the team.
Takeaway 4: Strategic Timing Matters
Once you know your numbers, feel ready, and are clear on values, it’s time to move forward. Now you need to think strategically. Timing your exit is choosing the perfect moment. So it involves considering market trends and industry shifts. Those who sold emphasize that waiting for the ideal conditions can significantly impact your exit.
Industry experts can help you read market trends. So connect with them. In her book Exit Rich, Michelle Seiler Tucker states that, just like in real estate, “you want to sell when the market is high”.
Take Sarah, a freedompreneur in the digital marketing space. By strategically timing her exit during the market upswing at the end of the pandemic, she maximized financial gains. It paved the way for her next adventure. Sarah’s story illustrates the importance of aligning your exit with market rhythms.
What signs are saying it’s time for your next adventure?
Take a moment to think about your entrepreneurial journey:
- Know how much your business is worth.
- Think about what makes you happy.
- Be clear on your values.
- Notice how the market is moving.
Remember, the right time to exit is when your business numbers match your personal feelings. May your exit open the door to your next adventure.