9 Signs It’s Time to SELL Your Business

0:00most Founders I know dream of selling their business those dreams are what keep you going when gets hard in the ideal world you sell your business when it's ready to be sold you've got a perfect growth chart churn is on the decline and customers are beating down the door to get your product and you get to go out on top but the reality is that life has a way of throwing kinks in your plan and you might find yourself thinking I'm not sure I want to do this anymore and that maybe you need to sell your company after talking with hundreds of Founders who've sold their company I

0:30started to notice a pattern of signs or cues you might call them that told them it was time to sell and I spoke with my wife Dr Sher Walling who is a founder and entrepreneur coach and consultant and she also had a bunch of patterns that she had noticed and we combined those into nine signs that it might be time to sell some of these signs are external meaning they're happening to you and some of them are internal meaning they're happening up here I'm going to cover all nine signs so you can recognize them when you see them and if if you stick around till the end I'll

1:01tell you about the best resource for preparing to sell your business but first I want to talk about something Annie Duke a former professional poker player calls quitting criteria in the book quit the power of Knowing When to Walk Away author and former professional poker player Annie Duke lays out the concept of kill criteria or predetermined guidelines that tell you when it's time to kill a project change your mind or fold your hand to cut your losses and she writes the best quitting criteria combine two things a state and a date a state is just what it sounds like an objective measurable condition that you or your project is in a

1:40benchmark that you have hit or missed and a date is when so quitting criteria for a business might look like once we achieve 3 million in ARR I will sell the business or if I receive an offer for $15 million I will sell the business you can imagine a bunch of different kill criteria and your particular kill criteria will likely be based on one or more of the following external cues the first one is that you've built something amazing the monetary value of your company seems like the simplest best determinant that it's time to sell you've built your business into something incredibly valuable and a buyer sees that value and wants to give

2:14you a lot of money for your company and you'd like to have that money in your bank account with this one you may already have a number in mind as one of your decision criteria so once your business's valuation reaches 10 million or 50 million or whatever that number is to you you plan to find a buyer and drive your Porsche 911 off into the sunset a second external criteria is that the business needs more Capital even if you don't want to sell your entire business sometimes it Mak sense to sell a portion of the company and or raise investment to invest in future growth of the business or sell the

2:44business entirely a company that has experienced significant growth in a short amount of time can benefit from the stabilizing factor of a private Equity acquisition or the resources of a parent company to help accelerate or sustain that growth another criteria is is that you're no longer the best person to run the business many Founders start companies because they're makers they're Builders or they're salespeople but as the business grows they find themselves managing an Ever growing team instead of doing the work they love the skill set of a zero to1 founder is not the same as a CEO managing 100 employees and you can obviously learn those skills but it's

3:19unusual for someone to be naturally gifted in both roles Sometimes the best option is to quit while you're ahead the fourth factor is when the competitive landscape shifts things can sometimes shift around the business in a way that makes it difficult for the company to continue to thrive a good example of this is platform risk so if your company was built to be integrated with a platform like Shopify or Amazon and that platform changes it can become an existential risk for the business for example a homeschooling platform could have received a considerable boost during the covid-19 pandemic only for growth to fall off again once kids

3:54return to school another example is the Psychedelic Market where money was briefly flowing into psychedelic related companies in anticipation of federal legalization and when that legalization was delayed the funding dried up if you suspect that external conditions will significantly shift the predictability or sustainability Beyond this point in time it might be worth selling the fifth external cue is a change in life status not all external cues are related to your business you might enter a new phase of life where it makes the most sense to step back this could be something like reaching retirement age or having kids getting married married getting divorced for Alicia soal founder

4:32of bar 13 14th Street the change was twofold her children entered high school around the time her aging parents began needing more help and as Alicia told my wife Dr Sher Walling in an interview she didn't want to miss out on the last years of her children being home or the last years of her parents' lives so she decided to step back from her business and see if it could run without her figuring it would be a good experiment either way she eventually sold the business to someone in the community who would love it like she had in the last external cue I'll talk about is another

5:02opportunity arises sometimes a can't miss opportunity will come not for your business but for you it could be a chance to run for a political office work with a Dream Team to solve a problem you're passionate about or work in an industry that's much more interesting to you I've seen entrepreneurs decide to exit because they're drawn to an exciting a fulfilling or a challenging opportunity and if you pass on a unique opportunity you might be saying no to a once in a-lifetime chance to level up and pursue something new now let's talk about a few internal cues the first one is existential restlessness it's not uncommon for a Founder to feel a sense

5:38of restlessness with where they are with their business where they are with their life asking themselves is this all there is do I want to keep doing this for 5 years especially when it's hard you might be getting bored with your business or with your role you might be starting to wonder if it could use your skills on a different problem maybe you want to explore other interests spend more time with family or take the last chance to become a professional snowboarder before your knees give out for adnr serial entrepreneur who started companies like woocommerce conversio and cogy external factors like a highly competitive market and plateauing growth

6:11made him start to think it was time to look for a buyer for conversio but it was the internal restlessness that pushed him over the edge ad0 told me building email marketing automation software is not my life's work it's not the thing I want to do for the next 10 or 20 years my next internal cue is that you want Financial Freedom so it's a less emotional but still internal reason to sell and this is when you've hit your own Financial Benchmark for the lifestyle that you want to live and you believe that you can sell your company for that as Jason Cohen wrote in his

6:40article Rich versus King in the real world why I sold my company some Founders start their business with the goal of selling for big numbers in other words to get rich and others might think they're in it for the long term as a lifestyle I.E to be king now you don't have to have exact numbers in mind for your financial Benchmark although personally I always did and I think it's probably wise to do so but but hopefully you'll know it when you see it meaning you'll know if someone comes along and makes you an offer if it's going to be a GameChanger for you and if it is you

7:06know you're only going to catch lightning in a bottle so many times in your life so certainly something to consider my next internal cue is that your interests change as humans we go through many iterations in our lives I've had a number of jobs and I would say even a number of careers over the last 10 to 20 years some people really love the first couple years of running a business they love the idea generation launching and finding product Market fit they love setting the the foundation in place and watching the ceilings grow that's not a bad thing but it is helpful to know that about yourself and set your

7:35companies up accordingly if you feel like you're going to be one where your interests change and you're going to want to exit and the last cue is your energy levels change at some point you will no longer have the energy you once had to run your business might be because of other cues like a life change existential restlessness or for some other reason you can't put your finger on it's not uncommon that as your business evolves your role of running the company becomes a different job all together there are many levers that you can pull to revitalize your energy before committing to selling your business so be sure to get some

8:06objectivity before making any big decisions this is an ideal time to talk to a business savvy therapist or a coach you may also consider asking your Mastermind group or opening up a conversation with your co-founder Mentor or partner at the start of this video I mentioned the best resource for preparing to sell your business and it's my new book exit strategy this video has been a preview of chapter 2 of the book later in the book we cover the struggles of going through an acquisition some of the nuts and bolts working for your acquirer thinking about what's next for you and frankly we cover so much of the

8:40thought process and what goes on inside your head as you go through an acquisition the before thinking about whether you should the during and the after the book is live right now on Kickstarter until December 12th check out all the extra bonuses we have over on the kickstarter and that link is in the description too or you can head to exit strategy book.com to check out the table of contents and get a free chapter I hope you'll back the book even if you haven't started thinking about your exit I truly believe the book has something for every founder Dr Sher and I put a tremendous amount of time effort and

9:13energy into creating this book and it's something I'm really proud of so I hope you enjoy it thanks for watching I'll see you next time