Buy Low, Sell High. So the saying goes in the stock market. These simple words of wisdom are equally useful to business owners; however, sage advice is not always easy to follow; especially as business owners are under the elusive spell of profitability coupled with a growing economy.
Timing is everything. If you’ve considered selling your business in the coming years, what are you waiting for? Sure, selling today may sacrifice some near-term profits, however one thing bears repeating … Timing is everything.
With the current bull market in its ninth year, the business climate is equally healthy across the broader small business spectrum. In fact, 2017 saw a year-over-year increase of 25% in the number of small business sold, over 2016.
I talk to business owners every week. By and large, many are experiencing year-over-year increases in revenues and profitability. While business owners are enjoying the profits, many have not considered the equally elusive sales multiple such profits can bring from the right buyer.
It’s difficult to gauge just how long the bull market will continue. A rising tide surely lifts all boats; but it’s wise to consider that tides go in both directions. The current rising tide has been characterized by a growing stock market, access to inexpensive business loans for buyers, and upbeat consumer confidence, driven by a healthy economy. However, with interest rates rising, and a forecasted end to our historically long bull market run, the tide can change in an instant.
There are many factors at play, when contemplating the best time to sell your business. As business brokers, we know first hand that buyers are more inclined to pay a healthy valuation for a company with a compelling track record of revenue and profitability. And likewise, buyers are inclined to pay less for a company where the inverse is true.
While many aspects of your business are unpredictable, certain things can be predicted with fairly good accuracy when it comes to selling your business; for example, the movement of tides, and the usefulness of simple stock advice … Buy low, sell high.