Have you ever wondered when is the best time to exit your business? Like a dance where every step is important, the success of a small business exit depends on perfect timing. Let's take a closer look at the signs that will guide you to the perfect moment to say goodbye to your business and move on to your next adventure.
Timing is important when quitting
Starting, building, and scaling a business is already difficult enough, and knowing when to exit is the ultimate challenge. So here are his four points for making the right move at the right time and achieving the right exit.
Lesson 1: Follow the flow of money.
Understanding the money story of your business is critical. Find out how much money you make and how small businesses are valued in the market. Take a closer look at revenue, EBITDA, price, and their trends. It will tell you when is the best time to sell. In keeping with the theme, your business's finances make up a symphony, and each note is important in determining when it's time to exit.
Retired freedompreneurs advise digging deep into your numbers.
- Don't just look at annual reports, understand the story your money tells.
- You may think that the best time to sell is when your business is growing. However, in Dan Andrews' book Before The Exit, Ian Sean disagrees. “It's best to sell when your business is flat, or only growing by single digits a year. Or when it's tanking; [buyers] I feel like they're getting a good deal. ”
- Seek advice from a financial professional who can help you decipher your financial rhythms. This goes beyond just understanding the current numbers. It's also about knowing what work still needs to be done to turn your business into a salable asset.
Point 2: Feel ready to quit
In addition to numbers, personal feelings are also important. If your business isn't making you happy, it may be time to exit. The emotional journey in entrepreneurship is just as important as the financial one. Listen to your heart. It will signal that the time for change has come.
Maya is a successful entrepreneur who earns approximately $1.2 million annually. Despite her financial success, she felt unfulfilled. What once started as a passionate business that supported her lifestyle has now turned into a golden cage. Her choice to sell was not only due to her last paycheck, but also due to her desire to experience satisfaction again. Her story teaches us that when your heart tells you it's time to spice things up, it's the right time to break out.
Point 3: Share the same values
The sweet spot for withdrawal is when the numbers align with your emotions and you know who to pass the torch to. Being clear about your values will make it easier to choose a buyer.
In my journey as a serial freedompreneur, the question of when is the right time to sell has occurred to me three times. Each exit was not just a matter of cash. I wanted my legacy to be in the hands of a buyer who matched my values. When I sold, it was the culmination of years of fulfilling work, a deep sense of accomplishment, and passing the business on to a buyer who respected our clients and team.
Lesson 4: Strategic timing is key.
Once you know your numbers, feel ready, and have clarity on your values, it's time to move on. Now you need to think strategically. Timing your exit is choosing the perfect moment. Therefore, market trends and industry changes must be considered. Those who have sold stress that waiting for ideal conditions can have a significant impact on exit.
Let industry experts help you read market trends. So connect with them. Michelle Seiler Tucker says in her book Exit Rich that just like real estate, “you want to sell when the market is high.”
Take the example of Sarah, a freedompreneur in the digital marketing field. By strategically timing her exit during a post-pandemic market rally, she maximized her financial return. It paved the way for her next adventure. Sarah's story illustrates the importance of exiting with the rhythm of the market.
What are the signs that it's time for your next adventure?
Take a moment and think about your entrepreneurial journey.
- Find out how much your business is worth.
- Think about what makes you happy.
- Be clear about your values.
- Pay attention to 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.
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