Mergers, acquisition, sell-off, buy out and takeover are common with large businesses and start-ups. Every now and then we read this news. However, there is no such large market for SME businesses.
Selling a business is a good option in several circumstances. Holding on to it for emotional or non-strategic or non-financial reasons is not a good decision.
A simple one-liner is when you can’t manage the business you need to sell. The key is to know the symptoms that you are not able to manage your business. It’s not easy to accept it but vital to accept it.
Here are some of the symptoms when you need to think are you the best owner of your business?
You Can’t Manage the Growth
Everyone has own limitations of managing things. When you started the business it was small, but when the business grows it requires a different level of management skills.
Every entrepreneur is not equipped to deal with the nuances and skills required to manage the expanded business. It requires vision and execution capabilities. Start-ups or SMEs might not be able to scale the business to its potential.
At a certain stage let the big businesses take over your business and build more value. It is like a relay race. Do your bit and pass it on to the right owner.
You Can’t Attract the Right Talent
Talent is the key asset. If you can’t attract talented people for whatever reason, your business suffers., Many times entrepreneurs think they don’t need specialized talent and they know everything. This is the biggest limiting factor. Entrepreneurs mindset to deal with talented people also poses a challenge.
Inadequate talent limits business growth.
“Good leadership requires you to surround yourself with people of diverse perspectives who can disagree with you without fear of retaliation.” Doris Kearns Goodwin
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You Can’t Raise Finance For the Growth
The inability to raise funds is another reason business suffers. Your credibility might have hampered due to the inability to manage finance efficiently and the account has become non-performing. This also could be due to other businesses is nonbankable hence as group good business can’t raise finance. There could be a governance issue and likes many such issues that make it difficult to raise finance to navigate the growth of the business.
In such a scenario, it is better to sell a good business and exit rather than to suffocate the good business and make it sick.
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You Get an Attractive Offer
Sometimes your business is strategic for other businesses. In that case, you may get an attractive offer from the buyers. Many large companies when they invest in the forward or backward integration, they acquire good business in the value chain.
An automobile company may acquire an auto ancillary business or textile business may acquire a garment business. These companies may offer an attractive valuation to your business.
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You Are Sick or Aged
This is another reason to exit at the right time. Rather than handing on to the business at all costs, accept the reality and move on.
Words of caution: Not exiting the business at the right time destroys the value. Business is a dynamic thing. Either it grows or stagnates. If your business is not growing and you are not able to do anything about it, your business destroys value.
In the world where giving up is considered not a good thing, it requires courage to give up on your business and move on.
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“Some things are up to us, and some things are not up to us.” Epictetus, Stoic philosopher
The key question you as an entrepreneur needs to ask is, are you still the best owner of your business?