Business owners have two main options when it comes to making money. You can sell your business and take the proceeds to fund a new venture or invest. Alternatively, you can keep the business and use it to generate an income, even if you take a less active role in running things. Although it can be hard to give up your business, there are some risks to sticking with it rather than selling. However, it can still be difficult to decide if the time is right to sell your business. If you’re considering your options then you can talk to an experienced local broker through Business Partnership. We can help you to weigh up the risks and benefits or selling up or sticking with your business.
Profits and risks
Selling your business will give you more financial security than hanging on to it in order to generate a steady income. You can decide whether to accept any offers that are made for your business. You’ll receive a set sum that you can use to plan for the future. Although there are always risks when you invest, you can seek financial advice and split your money between safe savings accounts, balanced funds, and riskier investments to ensure a reliable income.
The income you generate will depend on how much you have to invest after selling up. Getting a valuation can give you a good idea of how much your business is worth on the current market so you can make an informed decision about selling and start planning your future. We can also offer advice on how to maximise the value of your business before you sell. Strategies such as preparing your business finances, investing in new equipment, or simply waiting for the right time of year to sell a seasonal business can make a significant difference to the price and your future income.
Taking a closer look at your finances and prospects through our valuation service can also give you a clearer idea of your expected profits, costs, and income if you keep the business. We use your current state, past records, and our understanding of the local market to assess the future value of your business. You’ll be able to compare these predictions with the current sales value of your business to decide whether to sell now.
Even if the future of your business looks great, it’s important to remember that nothing is certain in business. If you decide to stick with it, you will continue to face all the risks of a business owner in an uncertain economy. You could face unforeseen threats such as a new competitor, a flood affecting your premises, or an economic downturn. One of the most common reasons for selling a business is reaching a stage in your life when you need more certainty about your income. If you’re no longer comfortable with these risks then it could be time to sell up and hand the business over to someone who is ready for the challenge.
The risks of running a business aren’t the only reason why it can be better to sell up than to keep going if all you want is a steady income. Changing from being a business owner receiving a salary to an investor or retiree generating income from the proceeds can affect your tax status. Depending on your plans for the proceeds, you might be able to reduce your tax bills. If you’re receiving a pension then this will be taxed as income, but the profits from your investments will be subject to Capital Gains Tax instead, which is charged at lower rates. The basic rate of Income Tax is currently 20% while Capital Gains Tax in the same band is just 10% (except for property sales). The rates move up to 40% and 20% respectively in the higher bands. We can introduce you to a reliable tax expert who can help you to understand the tax implications of selling and the best options for the proceeds. Our regional partners can also recommend legal experts, financial services, or other specialists in your area if you need more advice.
Who is the best person to run the business?
In addition to calculating the financial implications of selling up, it’s important to consider the impact on both you and the business. Running a business takes a lot of time and energy. You must also be ready to take risks in order to grow and develop the business as the market changes. If you’re looking forward to retirement or simply want a steady income, then keeping hold of the business might not be the best choice. You won’t be able to enjoy your dream lifestyle if you’re always getting calls about the business or working on your finances. The business could also suffer if you aren’t able to devote yourself to it or you’re unwilling to take chances, which could ultimately put your income at risk. If you want to move on or the business needs a new owner to take charge, then selling up will be better than hanging on. We can help you find the right person to take on your business. If you’re curious about selling your business you can use our website to carry out your own Value Builder Score which could help you determine which step to take.