Don’t Wait Till You’re Tired to Retire - A cautionary tale for Business Owners.
As a Business Broker, I have the privilege of meeting new Business Owners daily, we often talk about how business is going, what condition the market is in and if it’s a good time to sell. Most of these Business Owners are looking to retire and take some well-earned time for themselves. These phenomenal individuals have been hustling for decades and I’m over the moon excited and honoured to help them reach their retirement milestone. There’s just one last task between them and that goal, the sale of their business.
Let’s back it up to the question, is it a good time to sell. To answer this we need to consider both the business and the market, for this article we’re going to focus on the business. Let me introduce you to John, he’s a 71 year old Business Owner who started a manufacturing business back in his 20’s. John’s name isn’t actually John but that’s what we’ll use here for confidentiality’s sake. Over the years John grew his business into a success including distribution contracts around North America, consistent $100,000+ net profit, his kids grew up working in the business and he has every toy imaginable. Life is good.
About 10 years ago John decided that it’s time to slow down a little and enjoy his toys some more. He asked his kids if they wanted to take over the business but they decided it wasn’t for them. Without someone to take over, John decided to carry on with business as usual until a successor came along. As the years go by exhaustion gets the better of John and he gradually reduces production and marketing.
Fast forward to today, John has reached out to me and is interested in selling his business. He tells me his extraordinary story and introduces me to his family. We gather his latest financials for valuation and we find a significant decrease in production off the assembly line and a solemn net profit of $17,000. The product is still great and holds potential however the performance, which buyers look for and what a business is valued by, is no longer present. The difference between the valuation today and 10 years earlier would have been in the ballpark of $500,000.
Sadly this story is not as uncommon as I would hope which is why I’m sharing it with you. We, as Entrepreneurs, pour our heart and soul into our businesses and I want to help you achieve the best possible return on that investment so please, don’t wait till you’re tired to retire.
Rob Raybould Business Broker | Commercial Realtor www.robraybould.com Office: (250) 491-1111 Toll Free (888) 377-8009 Direct (250) 351-9209 Fax: (778) 484-3232