“Should I sell my business quickly now or wait another year?” Many business owners ask themselves this question, especially at the start of a new year. They hope that waiting one more year will lead to bigger profits and a better sale price. But is waiting really a good idea?
The simple answer is: waiting to sell can be riskier than selling your business now. Let’s look at why waiting another year might not be as good an idea as it seems.
Why Waiting One More Year Is Tempting
When a fresh year starts, business owners often think about their next life chapter. Spending time with family, starting something new, or just relaxing. But then they think: “Maybe I should wait one more year before I sell the business?”
It’s easy to understand why. When you get your business valued, you learn that buyers typically offer 2 to 5 times your yearly profit. This makes you think:
“If I make $100,000 more in profit this year, I could get $200,000-$500,000 more when I sell.”
“If I improve the business and boost sales, I’ll get a better price next year.”
This sounds good in theory. But there’s a catch: the benefits aren’t usually as big as you’d expect, and the risks can be serious.
Extra Resource: 7 Signs It’s Time To Sell Your Business: A Straight-Talk Guide
Here are four reasons why waiting to exit could be a bad idea:
Reason 1: One Good Year Isn’t Enough for Buyers
Let’s say you have an amazing year with record profits. That’s great! But here’s the problem: buyers and banks don’t just look at one good year. They want to see steady growth over three years to make sure your success will last.
If you make $100,000 more this year, your business value won’t automatically go up by $200,000-$500,000. Instead, buyers look at your average performance over several years. That great year might only add $150,000 or less to your sale price.
Bottom line: The benefits are limited.
To really increase your business value, you’d need several years of higher profits, which is hard to guarantee.
Reason 2: One Bad Year Can Hurt You Badly
What if things don’t go well this year? Buyers pay extra attention to any drops in performance, and they worry more about bad years than they get excited about good ones.
If your profit drops by $100,000, your business value could fall by $400,000 or more. Why? Because buyers look closely at your most recent year to guess how well the business will do in the future.
In other words, one bad year can undo years of hard work. The risk? Very high.
Reason 3: Unexpected Problems Can Happen Anytime
Even if you do everything right, unexpected problems can pop up and hurt your business. Recent examples include:
- The COVID-19 pandemic
- Supply chain problems (like after the Suez canal got blocked)
- Higher interest rates, making it more expensive for buyers to borrow money
- New competition (including the AI revolution we are currently in)
- Health issues or important employees leaving
Any of these can seriously hurt your business, even if it’s not your fault. Smaller businesses are especially at risk from these sudden problems.
Extra Resource: Use ChatGPT To Time The Sale Of Your Business
The lesson? Don’t assume everything will stay good. If you’ve had a good year, it might be smart to sell your business now, before something unexpected happens.
Reason 4: Small Drops in Sales Can Wipe Out Profits
Here’s something important to know: even a small drop in sales can really hurt your profits. If sales fall by just 10%, you might end up making no profit at all. This happens because many costs – like rent, salaries, software and utilities – stay the same even when your revenue goes down.
Many owners keep spending the same amount when sales drop, hoping things will get better. But this often leads to losing money instead of making it.
And if your business stops making a profit? Buyers won’t want to pay much for it.
Extra Resource: 2,400 Businesses Per Day: How To Exit In A Buyer’s Market
The risk of waiting? It could be terrible.
Why Selling After a Good Year Makes Sense
Instead of risking another year, think about these benefits of selling your business now:
- Keep what you’ve earned: After a good year, buyers will see your business as valuable. Take advantage of this.
- Avoid risks: Selling now protects you from future problems or poor performance.
- Move forward: Whether you want to retire, try something new, or just enjoy life, selling now lets you start your next chapter with certainty.
You can’t perfectly time a business sale. If your business is doing well and you’re ready for a change, don’t let worry, habits or fear of the unknown stop you from making a smart choice.
Steps to Sell Your Business Now
If you’re thinking about selling your business now, here’s what to do:
- Get your business valued: Find out what it’s worth now, so you can make a good decision. Extra Resource: 3 Business Valuation Methods For A Small Business
- Get your numbers in order: Make sure your financial records are clear and up-to-date. Buyers like this.
- Talk to experts: Work with people who know about selling businesses.
- Think about the future: Find a buyer who shares your ideas about where the business should go.
Final Thought: Don’t Risk Everything for One More Year
Waiting to sell might seem smart, but it’s often riskier than you think. While you might make more money by waiting, you could also lose a lot if things go wrong.
If you’ve had a good year and feel ready to sell, don’t let fear or greed stop you. Often, the best time is to sell when things are going well.
Your next chapter is waiting. Don’t risk it all for one more year.
This post was originally published on here
