When SHOULD You Sell Your Business?
By: Max Lapit
Tags: Digital Nomads, Entrepreneurship, Online Business, Digital Asset, Amazon Fba

When SHOULD You Sell Your Business?

Photo by Elena Koycheva on Unsplash

When you build a business, you’re going to reach a crossroads at some point.

Whether your business is your baby or it’s just a side hustle, the idea of letting it go will have at least crossed your mind once.

As far as the market is concerned, there isn’t a right time to sell. The market is liquid year-round, so you’re not going to be greatly affecting your exit by cherry-picking a specific month. What matters far more is what’s going on in your life.

After brokering over 1,300 deals at Empire Flippers, we’ve seen all kinds of reasons for wanting to sell, but it usually boils down to two main reasons: personal or business. First, we’ll talk about why personal reasons might affect your decision to sell your online business.

The Hamster’s Wheel

The idea of the passive income lifestyle gets shouted about a lot with owning and creating an online business. “Earn more for working less,” we’re always told by so-called gurus on Instagram and YouTube.

Passive income is the reason why many people start online businesses, and this lifestyle is something that many people have achieved through building and buying online businesses.

However, it’s not all sipping cocktails in a beach bar; real work needs to be done and hours need to be spent in front of a laptop.

There are many people looking to get into the same position you’re in, and it might be that they’re hungrier and willing to put more work in. The constant battle against competitors means you might feel like you’re forever on a hamster’s wheel when it comes to running your business. This leads to many entrepreneurs feeling burnout, which pushes them to sell their business while they’re still on top of the game.

The Curveball

Sometimes life throws a situation at us that forces our hand. This was the case with the COVID-19 pandemic and will continue to be the case with life events that we don’t always foresee.

We’ve seen people sell their business to pay for medical care or to help out a family member in need. Whatever the case may be, being able to sell and receive a lump sum of capital is certainly one of the positive aspects of owning an online business. It’s also pretty common to see people sell their business before the birth of a child. This gives them much needed free time and extra money to spend time with their newborn, something many people would say is priceless.

This can be an emotional one for sellers, especially if they were reluctant to sell. But it should come with an immense sense of achievement knowing that you’ve sold a business and are allowing someone else to experience all the benefits of owning an online business. Plus, the skills you leave with are incredibly valuable, you can put them to use to create another business when you see fit.

To Fund a Life-Changing Event

This is perhaps the most common personal reason why someone will want to sell their business.

Selling your business means you now have a bunch of capital to put towards whatever you want. You could buy a new house and, depending on the size of your business, it might even allow you to pay for it in cash.

We’ve also seen a business sold to help a couple adopt a child, as well as a business sold to help someone be able to pursue their dream of becoming a fireman. What all of these personal reasons come down to is that you should sell when you feel the time is right. A lot of doors open up when you have the money to do so, and you should use the opportunity to achieve the lifestyle that you want.

Strategic Reasons: The Asset Flywheel

If running online businesses is your full-time gig, or you want it to be, then you can use the asset flywheel to build your wealth quicker.

This is the idea of selling one business and taking all the capital earned and buying two or more businesses. You then look to improve them and you now have two high-performing online businesses instead of one. This process can be repeated until you reach your desired level of income. We’ve seen entrepreneurs build up an attractive portfolio of assets this way.

Not All Assets Are Built the Same

People who own online businesses tend to have more than one on the go.

How these businesses scale-up can be widely different from one another, but when you find one that’s hot, it’s time to double down. Unfortunately, this normally requires an influx of cash to really make the most of the opportunity.

If this is the case, then it might be time to sell one of your assets to boost the efforts of another.

It’s Time to Move On

Sometimes, when you’re running a business, it pays to step back and take an honest look at where you’re heading.

Online businesses can be very competitive, and it might be that the market is moving against you, that there is an increase in businesses in your niche, or it could be as simple as you not seeing the opportunities you once did.

That doesn’t mean they aren’t there; a buyer could come in who has loads of ideas for your business, but if you’re struggling, then it could be time to sell, collect the money, and move on.

If You Know You Know

There are tons of reasons why you should consider selling your online business. The fact of the matter is that you have to ask yourself the question of when the right time to sell is.

In a personal sense, this question can allow you to open the doors to opportunities you never thought possible. On the business side, thinking about selling can help you build your wealth even further if you go about selling your business the right way.

This is all thanks to the fact that selling creates a huge windfall that earns you two to four years of profit upfront.

Planning Your Next Venture

If your situation allows it, then take an hour to plan out your next move. Where do you want to be in a year’s time?

Write out a plan of action on how your online business is going to get you there. This will be the best indicator of when you should sell.

To get a sense of where you are, it helps to get a valuation. This can show you what the next steps are. Perhaps you need to spend more time building your business before you can sell, or perhaps you need to sell and buy more businesses.

Use our free valuation tool to see how much capital you can expect to receive should you decide to list on the open market. It’s built using the latest sales data and will only take a few minutes to fill out. From there, you can decide whether to begin the exciting process of selling your online business.