6 Signs That It's Time To Sell Your Startup

By Tim Parker | July 28, 2012 AAA

Starting a business is risky. Sometimes your entrepreneurial dreams live up to what you were hoping they'd be, while other times those fantasies fall short. Selling your business isn't necessarily a sign of failure. Every investor knows that the key to making money is knowing when to start and when to end. You may be thinking that you've reached the end of this investment, but how do you know? Of course, there are very few concrete answers to this question, but here are a few circumstances that indicate that it's time to sell.
SEE: Prepare To Sell Your Business

Taking, but Not Giving
You were optimistic for your business, but so far the business has taken more money than it has produced. That's going to happen at the beginning, and possibly for a few years after its inception, but if you've gone years without producing a profit, it's probably time to sell the business or its assets.

Nobody wants to admit failure, but remember that you have your retirement to think about. Not only do you have to make enough money for today, you also have to make enough for your retirement years.

It's Taking up Your Time
Your time has value. Regardless of where you choose to spend your work hours, the amount of time you spend should eventually pay you back. A brand new business often requires giving up a lot of leisure and family time to make it grow, but if it's impacting your family life, it's time to re-evaluate.

You Inherited It
If you have a family member that was a successful business owner, you may find yourself the new owner of that business when they pass away. If you have no interest in running the business, you can either sell it or hire others to run it for you. Although noble, spending your life in a job where you have no passion often makes for an unhappy life.

Big Competition Moved into Town
Sadly, small businesses find it hard to compete with big box retailers when they move into town. You likely don't have the financial resources to offer competitive pricing or pay for aggressive ad campaigns. Don't be too quick to sell, because personalized service still means something to a lot of consumers. If it becomes clear that you can't compete, selling may be your best option.

You and Your Partner Have a Falling-out
If your small business is owned and operated primarily by you and a partner, having conflict that cannot be resolved may require a change. You may sell your stake to your partner, he or she may sell to you, or the business may be resolved. A positive working environment is more important than profit. If you're both sure that there is no way to resolve the conflict, that might mean the end of the business. Another related reason may be that your partner wants to sell and you don't have the capital to purchase this or her stake.

You Get an Offer
You've done so well that you get a buyout offer and it's an offer you can't refuse. After having the offer examined by an attorney, the right move may be to say yes. Serial entrepreneurs often start businesses with the hope of eventually selling for a profit, but it's OK to say no if you love what you do and money isn't your primary motivation.

The Bottom Line
No decision to sell should be made quickly and it shouldn't be made alone. After some serious contemplation on your part, ask those you trust - an attorney and/or fellow business owners - for advice. There may be another option that you haven't thought of that might be a better choice.

SEE: 7 Steps To Selling Your Small Business

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