For Sale By Owner

When The Ride Is Over

Lautens was lucky; she noticed right away that she was no longer enjoying her once-beloved business. "When it stops being fun, that's the number-one sign it's time to sell the business," says Barry Merkin, clinical professor of entrepreneurship at Northwestern University's Kellogg Graduate School of Management in Evanston, Illinois.

Speaking not only as an academic but from the experience of building and selling his own metal furniture manufacturing business, Merkin says, "If the business isn't making you delighted to get up in the morning anymore, then you're probably not doing the good job you used to do, so it's a marvelous time to sell."

But it's also a dangerous time, Merkin says. "When [an entrepreneur decides] to sell, some kind of emotional `click' happens--and it gets out of control fast. Instead of spending your days and nights trying to build your business and keep it healthy, you are focused on selling it and getting out. But if you start neglecting the business to try to sell it, your need to sell it increases and the interest in [keeping it up] is gone." This vicious circle is self-defeating; it's important to maintain a healthy business even if you know you are letting it go.

The realization that it's time to sell can dawn any day, so the smart business owner is always prepared. In fact, experts advise having your eye on the exit from the day you open for business; it's a tactic they say keeps the business in its best shape to be sold and handed over.

"If you know you want to retire when you turn 65, you can plan on that as a sale date, but most people can't fix their horizons that precisely," says Frederick D. Lipman, a Philadelphia mergers and acquisitions attorney and author of How Much is Your Business Worth? (Prima). "That's why they should always be preparing for the day they will leave the business."

A sound business is easier to sell--and to keep. If you're in a retail business where value is based on how many locations you have, boosting the number of locations sweetens the pot both for potential buyers in the future and for you in the present. Similarly, if your company has developed a product or process but you haven't gotten a patent, you're exposing yourself to risk and potentially driving down your company's eventual sale price.

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This article was originally published in the January 1998 print edition of Entrepreneur with the headline: For Sale By Owner.

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