Per the Barlow Research Associates, the average small business owner in the U.S is 60 years old, with data from Emergent Research showing that 40% of owners who are 65 and older are considering selling their business due to the COVID-19 economic downturn.
But is it a good idea to sell your business in a time of adversity or should you obtain small business loans to pivot business operation during rough seasons?
That’s the point of this article. We’ll walk you through things to consider before selling your business during hardships, and give you a few techniques you can use to navigate the challenges.
3 things to consider before selling your business
Your reason for selling the business
The business world thrives in booms and recessions. Thus, tough times will inevitably come and pass. That means you shouldn’t rush to sell your business because of the hardship itself, lest you regret it a few years down the line.
Don’t sell your business purely because you lack financing to cover payroll, pay suppliers, meet marketing costs, and other business expenses. Such financial challenges can easily be met by obtaining small business loans from reputable lenders to pivot your enterprise through adversity instead of selling it.
But there are solid reasons why selling your business during hardships may be a good idea. For instance, you may want to sell your business so that you can retire. Perhaps, you’ve experienced burnout and don’t feel like putting more resources and energy into rebuilding the business or have health issues that may prevent you from rebuilding it.
Your age and energy levels
Are you still young and energetic? Do you still feel that you’ll have a humble time rebuilding your business and get it back on track after the rough season is over?
Selling your business closer to or past the retirement age may be a good idea, especially when you don’t have reliable heirs to inherit your enterprise. Putting more time, energy, and resources into rebuilding it may delay your retirement for several years.
Again, you’re probably burned out at that age, and it may be a good time to cash out. Selling may be the best way to reward yourself for all the time, energy, and resources you’ve put into the business over the years.
But if you’re young and energetic, why not use small business loans to pivot your business through adversity? You still have time to reinvent yourself and see your business dream unfold in the future.
How adversity affects your business’s worth
Naturally, you may think that your business’s worth dips during recessionary times. According to BizBuySell’s Q1 Insight Report, that’s not always the case. While many businesses have been shuttered by the pandemic, 11% of businesses saw their sales rise during the pandemic, while another 11% haven’t seen any impact.
The point is, you should do your research to find out what businesses like yours are selling in the current market. If the value of your business increases significantly during times of crisis, you may want to sell it at its highest value. You can also determine the value of your business by asking the experts selling and buying businesses. Prepare the questions you need to ask ahead of time when you contact a business broker. Do your due diligence first so you understand what questions you need to ask. Once you’ve done all this you should understand the true value of your business and can decide if it’s something worth building on or if it’s time to sell and try something else.
But if the value has dipped, you may not get a fair deal. It may be worth holding on so that your business recovers in the future before positioning it for sale.
Techniques to float your business during adversity
If you love what you do and still have the energy to do it, you should work to overcome adversity instead of selling your business.
Maintain a positive attitude
Think of adversity as temporary. A recession will soon be followed by a boom, and only those who survive adversity reap the benefits of booming business seasons.
Accept adversity for growth
Savvy entrepreneurs see adversity as important for the growth of the business because it helps weed out competitors. So maintain your stride and passion and let your competitors quit.
You’ll need others to face adversity. Reach out to good advisors and successful entrepreneurs and learn a thing or two on how to pivot business operations during hard times.
Partner with the right lenders
Finally, You’ll need money to navigate hard times. That’s why it’s vital to build solid partnerships with the right lenders who can offer you small business loans at favorable terms during adverse business seasons.
Consider working with a reputable online lender like Camino Financial. They offer small business financing in just five simple steps and welcome borrowers with a fair credit score or no credit history.