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.
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.
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.
No matter the reason, from retirement to a change in lifestyle, selling a business is a huge and life-altering decision. Therefore, it’s no surprise that when looking to sell their business, some fears and assumptions come to the surface.
Our brokers here at Business Partnership know what makes a successful business sale and we want to share some of the worries associated with selling and the common fears that put barriers in the way of a successful sale.
Not achieving the right market value is the top common fear for many people selling their business as they have no idea how to value their business. The first thing they ask is for a free valuation as they’re concerned that  they could turn down a great offer in the hope the next offer might be better. What they actually need from a business broker is a marketing strategy to achieve that best offer.
Confidentiality is also a common fear for sellers as they don’t want their customers, suppliers or staff to find out about a sale before the deal has been agreed. A sale is often a positive decision, but people jump to conclusions and adopt a worst case view and assume there’s something negative going on. Depending on the nature of the business, some people are also conscious not to upset the supply chain, by selling to a competitor, or to create uncertainty amongst employees.
Knowing when you get paid is another key concern for many. A seller wants their payment upfront and to know how much they will get paid when they hand the keys over to the new owner.
There are some sellers who are also worried that the deferred payments doesn’t appear – especially where they are relying on it for their retirement and it is vital to the life they had worked so hard to achieve. In this instance our advice would be to prepare your business properly for sale, remove the risks and then go and find buyers who can afford your business.
For many people, they are concerned about what will happen to their legacy and employees once they sell, especially if some staff have been working for the business for many years – there can be  strong emotional bonds with their colleagues and the business. Some sellers are willing to accept a lower offer to ensure their workforce are safe and their brand name continues long beyond the sale.
Last but not least, some sellers worry that they won’t actually be able to sell their business and question whether they have created something of value. Again, good preparation in running your business as well as in the sale process will make it a desirable asset that others want to own.
Our research confirms that within a year of having sold, 75% of business owners feel one significant regret after their sale, because they hadn’t thought it through. They hadn’t thought how much cash was enough to support the lifestyle they want, how their employees would be looked after, or what they want to do next to fill the gap left by owning a business. We help work through those issues to ensure these fears don’t get in the way of a successful sale.
A skilled business broker will help with all of these issues – from preparing you and the business for sale to developing the right marketing strategy, protecting confidentiality, finding the best buyer and agreeing a deal structure that protects both seller and buyer.
When looking to sell a business, knowing your business value and having the right guidance throughout the entire process is key. Find your local broker to make the initial call.
Whether they’re looking to spend precious time with family, have re-evaluated life goals due to the pandemic or are looking to a good retirement, many business owners are worried they won’t be able to sell their businesses because of the impact of COVID-19 on the economy. We want to combat those misguided assumptions.
There’s been a marked increase in businesses needing advice on how to sell their business as the pandemic has pushed them to think more pro-actively, as well as to consider de-risking.
Investors with capital are always looking for opportunities, no matter what is happening with the economy. Foreign buyers are also still active in the UK, despite ongoing uncertainty because of Brexit – sterling remains weak, giving UK businesses additional appeal amongst buyers. There’s been a solid demand for businesses that have shown themselves to be ‘COVID-proof’ – in terms of technology, automation and security – but also green shoots for struggling sectors such as hospitality.
However, if you do decide to take forward your plans to sell it needs thorough planning and preparation.
Preparing to exit a franchise might seem like it’s the end but we believe it’s important for franchisees to realise that for whoever is taking over, it’s the beginning. Potential buyers aren’t buying the past of the business, they buy the future and need to be able to see how it will work in their hands and grow in their hands.
Leave no doubt that your business has a viable future with growth opportunities and demonstrate this to potential buyers. Just as important – show the buyer that your involvement in the company hasn’t been focused solely on the immediate performance, but also on the long-term goals. Anyone preparing to exit needs to allow buyers to understand the current position as well as the potential direction of their business.
Think about how you’d answer questions that a potential buyer might ask. For example, what is the future potential of your business? What are your major competitors doing that you’re not? Be prepared to share your knowledge and understanding of the opportunities that exist within your sector and how they impact your business.
The time that you choose to sell your business is vital. On one hand, you need to be aware of how your business has grown and what its current vulnerabilities are resulting from this. On the other, you want to ensure that you have built sufficient value in your business to sell it at the best possible price. Business owners, whether serial entrepreneurs or would-be retirees, should always be looking at exiting their investment because this is intelligent business thinking.
During the pandemic, our regional partners have had to adapt their usual day-to-day practices. They’ve had to be more flexible in interactions with potential buyers, offering socially distanced viewings to ensure everyone stays safe. However, even with the impact of COVID-19, there’s still been significant interest from a wide range of buyers.
To find out more about Business Partnership or to get a free business valuation, contact your local office for a confidential conversation.
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Whether you’re selling, buying, or planning for the future, Business Partnership is here to help. Contact us today to speak with your local Regional Partner and start your journey toward success.