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When It’s NOT a Good Idea To Sell Your Website – Part Two
By Quiet Light
In part one of When NOT to Sell Your Website, we took a look at Dawn, a young mother who didn’t have the bandwidth or the interest in running both a business and her family. We’ve seen how burnout can affect you and make selling seem irresistible, even when other, more profitable options are available.
Another common cause of early, less-than-ideal sales is partner conflict. So what happens when two friends find themselves at odds over the direction of their business, but equally eager to sell?
When Friendship & Business Collide To Force You To Sell Your Website
On a recent valuation call with two business partners for a software as a service (SaaS) business, I initially advised the partners to keep their business. They put less than five hours (combined) into the business each week, and it produced about $65,000 in total cash flow for the partnership. The lifetime value (LTV) was terrific, and even with the low workload, trends were steady. Based on the details they provided and the category of the business, I estimated the value at between $200,000 and $230,000.
Selling this easy-to-operate business for $200,000 would leave them with much less than holding onto it for five to ten years would. Maintaining the business over that time could help fund their kids’ college educations, and still provide a substantial dollar value if they sold it when they hit the ten-year mark.
The partners said they’d been friends for years, and had recently clashed on what direction to take the business. They said their friendship was more important than the business, and that neither of them was truly passionate about the business category. Consequently, they preferred to sell the business, rather than risk eroding their personal relationship.
As with Dawn, these clients did not heed my advice about waiting, and most likely cost themselves a bit of money in the end (although they most likely gained more intangible emotional and interpersonal benefits that don’t really carry a dollar value).
Whether you’re in a partnership or a sole proprietorship, it makes sense to ask yourself: Are the benefits to your emotional health and personal relationships going to outweigh the potential financial benefits if you hang on to the business and solve your problems another way?
If the answer’s “yes,” then selling may be your best shot. Otherwise, the smart money’s on a less drastic solution.
How Waiting Helped Me Make the Most Of My Own Sale
The clients in the two stories I’ve shared ultimately decided selling was the best solution for them, their families, and their businesses. But waiting turned out to be the best choice for me when I sold my business through Quiet Light Brokerage in 2010, before I joined the team here as an advisor.
I spoke with four or five different brokerage firms at the time, and I was shocked at how tough it was to get a few to respond. My conversation with Mark Daoust, Quiet Light’s founder, was different. He simply advised me on what was best for me, while others did their best to sell me on their companies.
Mark reviewed my numbers and advised me to wait six months to increase my trailing 12-month owner’s benefit. My numbers were finally trending up after the recession, but I had a few months to go before a few remaining weak months fell off my “trailing twelve.” Waiting to sell helped me get a stronger valuation for my business, and a better return on my investment.
Mark did not promise to call or follow up. He simply gave me advice on what he thought was best for me, and left the decision in my hands. He did the right thing for the client, and it made a big difference when I finally did sell. Today, when working with my own accounts, I follow the same principle – do what’s best for the client.
Selling your business might seem like the best and most appealing option to you, particularly if you’re burnt out, struggling to find work-life balance, or find yourself facing an increasing number of obligations that take you away from the business and hamper its growth.
But remember, most problems have more than one solution, and by taking the time to investigate your options, you can avoid cheating yourself out of a truly exceptional value when the time comes to sell your business.
Are you thinking of selling your business? Have you sold a business too early and later regretted it, or was it the best decision of your life? Let us know in the comments!