It is never easy to sell a company. It takes time, patience, and skill for the perfect buyer to be found. The process of selling your company can take months or even years.
On this Golden Nugget of The ROI Online Podcast author, consultant, and business owner Josh Patrick shares with us the important considerations for sell time.
The selling time is longer because there are not as many buyers in this climate as sellers. It also takes a lot of time to sell the company because you need to sell out all of the assets and settle any liabilities.
To sell your company much faster you have to sell to someone who will operate it better and sell it before all the value deteriorates through neglect. The selling time is different from one company to another depending on how it has been managed.
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Josh explains to us how, if you're lucky, and your company is really fast-growing, it could be as little as six months from the time of sale to when you collect all that cash. But if not so much for luckiness in any one area but a combination of the three things mentioned earlier on this road...well then don't expect 10 years before that big payday! On average though 50% may never make it to sellable status at all; those companies are still waiting patiently out there somewhere just hoping someone will notice them.
Josh also shares the reason you need to know how saleable your business is.
If your business really isn't very saleable, there are other strategies that you can use to get yourself so you can leave your business when you want and the way you want.
"But yours is not for me to sell. And in fact, even if it is through a sale, the business sale is not going to get you to financial independence."
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Unless you're in the top one to 1/10 of a percent of all business owners will say, I sell my business for $2 million, a nice amount of money. Not many businesses will sell for that much but first of all, you'll lose 40% of that to taxes and fees, so now you're down to $1.2 million. If you invest that, and you talked to a financial planner, they'll say, "Oh, you can spend about $40,000 to $50,000 a year of that."
Fact is, if my business is selling for $2 million, just means it's making between $300,000 and $400,000 a year, meaning I'm probably living on about $150,000. So $50,000 is a long way from $150,000.
So if you think you're just gonna sell your business right off into the sunset, you're not.
These facts may seem harsh but it's good to have them in mind and also have the right expectations and information to make a good decision and know what to expect when selling your business.
The sale of your business is not an easy task. There are many factors that come into play when trying to sell a company and the process can take anywhere from six months to ten years, depending on how much luck you have and what stage in life your business is currently at. If you're lucky enough for it to be sold quickly, then there are still taxes and fees involved which will reduce the amount by 40%. The average time frame for selling a company falls between 50% - 60%, but if yours isn't sellable or doesn't make enough money, don't despair! You may be able to live off of half of its net income while also having some other strategies so that once you sell your company (which could happen any day).