During these tough times, almost everyone is coming up with different ways to earn money despite the current economic conditions. Employees that were laid off and furloughed at the onset of the pandemic either looked for work outside their fields of expertise or started a small home-based business. Others who were retained and allowed to work remotely looked for side gigs for extra income. A lot of people started selling different things — from pre-owned items to OEM electronics to their own cars. People did what they could to bring money in.
There is also a small group of people who are seriously considering selling their businesses.
Motivators for Selling a Business at This Time
People who are thinking of putting up their businesses for sale are motivated by different things. Basically, there are two types of motivators for each person, namely, intrinsic and extrinsic motivators. Let’s take a closer look at both of them below:
Intrinsic motivators are called as such because they mostly pertain to personal or internal reasons. The reasons can vary from a businessman who already wants to retire or one who would like to divert their energy and attention to other worthy pursuits. Perhaps, this business owner has already grown tired of the business and is looking for another venture to invest time and money in. In other situations, they might need the time off because of a certain medical condition.
On the other hand, extrinsic motivators are pretty much any reason concerning external factors, especially money. Most of the time, business owners who are extrinsically motivated sell their business for profit. They evaluate and gauge their business and how much money it will make them if they decide to sell. If the market conditions are right and the numbers are favorable for them, they have their businesses listed, hoping to find the right buyer and close the deal as soon as possible.
Things to Consider Before Deciding to Sell a Business during a Pandemic
Selling a business isn’t the same as selling used items, such as clothes, collectibles, and cars. It is not done on impulse and should be given careful thought at each step.
Before anything else, responsible business owners carefully consider certain factors that could help them come to the best possible decision.
Here are a few things that a business owner needs to consider.
1. How much has the pandemic affected your business?
Selling a business wasn’t exactly easy prior to the pandemic. COVID-19 just made things a lot more difficult. However, that’s not to say that it can’t be done under this global crisis. You will just need to perform your due diligence.
What made things a lot tougher now is the instability brought about by the pandemic. A lot of stable businesses closed shop a few months into the health crisis. The ones left are still working on getting their footing back. While the reopening of the economy has somehow allowed them to gain some momentum, stability is still elusive.
Whether you’re buying or selling, you need to approach this with extensive research and careful planning to get the best possible outcome.
2. How long are you willing to put up with your business?
Normally, a business sale transaction would take anywhere between six and nine months to process and complete. Typically, anyone who buys a business would ask the former owner to stay on board as an employee or consultant for about a year after the deal is closed. If you want to have nothing to do with your business in a year or two, you should get started as early as now.
Depending on your plans and goals, you can draw a timeline that will allow you to plan everything out carefully.
3. Who are your buyers, and how badly did the health crisis affect them?
The main factor that will determine whether your business will sell at this time is the potential buyer’s financial capacity to make a purchase. The pandemic has left a lot of individuals and organizations struggling with their cash flows and operations. This is a major factor that you need to take into consideration.
You also need to consider your industry and target market’s condition at this time. Some are doing better than most, so if your business belongs in a struggling industry, it may take you some time before you find a buyer who’s willing to pay the amount you’re asking for.
The bottom line is, if you’re thinking about selling your business, you need to give it plenty of thought to get the best possible results for both yourself and the buyer.