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Is it Time to Sell Your Small Business? posted on Monday, 15 June 2009

Whether your small business is thriving or simply trying to survive these tough economic times, small business owners may be asking if it’s time to sell their business.

By Joseph Benoit
Small Business Banking Executive
Union Bank, N.A.

While there is no simple answer to this question since each business owner’s situation is unique, there are a few factors to consider when making this decision.

First, it’s important to determine why you may consider selling. The answer may crystalize your goals and help you determine if selling is the best option for you. Personal reasons such as retirement, poor health or change in marital status are understandable. If your reasons reside outside the sphere of personal circumstance, consider these factors in your decision-making process:

• Business health. If your business is thriving in this challenging economy and your income statement has consistently shown strong profitability, your business may receive a higher sales price. Buyers look for steady profits and growth when considering the purchase of a business. If, however, your business is facing challenges like declining profits, legal issues, or increased turnover, it may be wise to remedy these potential challenges before selling.

• Goals. Ask yourself where you see yourself in a few years. Do you envision the business growing? Are you thinking of retiring soon? When market conditions are optimal, do you have a plan to expand? Your ultimate decision should be aligned with your goals.

• Dedication. It is important to gauge your desire to continue owning your business. Do you still have the drive and commitment to press on? This is an important question, as your focus and dedication are essential components of your business operations.

• Market conditions. Consider how your industry is faring during this uncertain economic climate. If your business is part of an industry that may be less affected by the downturn—such as healthcare, environment or energy to name a few—you may not need to wait for an economic recovery should you decide to sell.

• Demand. Amid increased job losses throughout the marketplace, there may be more individuals looking to purchase an established business that has weathered tough economic times.

• Finances. Consider how selling your business will affect your financial situation. Does your business currently provide enough income for you and your family? If you decide to sell, what are your options in terms of future income?

• Outlook. Take the time to review where your business and industry are headed. Is your business on the cutting edge of an industry or is it becoming outdated? Is it doing well relative to its competitors? Your answers may provide added insight when considering your business’ future.

• Taxes. Consider consulting with an accredited tax professional about the potential benefits and tax implications of selling your business.

Giving careful thought to factors such as your personal circumstances, your business’ health, your future goals and the outlook for your business, can help you determine whether it is time to sell. Consider seeking the advice of a certified public accountant (CPA) or a professional specializing in business sales when considering the sale of your business.

Joseph Benoit is the small business banking executive for Union Bank, N.A., a full-service commercial bank providing an array of financial services to individuals, small businesses, middle-market companies and major corporations. Union Bank is California’s fifth largest bank by deposits. The bank has 335 banking offices in California, Oregon and Washington, and two international offices. UnionBanCal Corporation is a wholly-owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a subsidiary of Mitsubishi UFJ Financial Group, Inc. (NYSE: MTU).

Posted by Joe Benoit