Should I Sell My Business?

This is a question every entrepreneur must face sooner or later. Most avoid considering it and delay the decision because selling a life's work is a big step and involves emotional challenges. However, delaying succession planning has its drawbacks. These can be easily avoided by starting the planning process early. Here, we explore why selling a business can be difficult and the benefits of early preparation for the sales process.

What Causes Entrepreneurs to Hesitate?

Understanding Emotions and Making Rational Decisions

As an entrepreneur, you've invested a lot of passion and energy into building your life's work. It's understandable that considering a succession plan can be challenging. Too many questions arise at once, and the change seems overwhelming. However, this is precisely why you should start thinking about it early. Each year, 70,000 businesses in Germany seek a successor, and in about a quarter of these cases, the process is unprepared and too late. This is unfortunate, as a poorly prepared sale can significantly lower the sale price. But why is this decision so difficult for entrepreneurs?

Many hope that their children or grandchildren will continue the family business. In the past, this was normal and didn't even need to be discussed. However, times have changed. Today, passing the business to children happens only in rare cases, as 95% of them do not want to take over the family business. Reasons include a lack of interest in the business, not being suited for such a high responsibility, or wanting to pursue their own goals. Open communication is crucial to finding an alternative early on.

Emotions as Obstacles to Business Sales

Even when it's clear that a successor outside the family is needed, many entrepreneurs delay the sale. Emotional reasons are often behind this: fear of letting go, uncertainty about whether selling is the right choice, and concerns about what comes next. These emotions and fears are understandable and shouldn't be ignored. What's important for the sales process is to address them. A study on European SMEs by Harvard University found that emotional reasons were responsible for 80% of failed succession plans. Since controlling your emotions can be challenging, the best approach to selling your business is with a partner by your side. Seek out a succession advisory team that can serve as a sounding board, understanding your concerns and desires while providing rational and strategic insights.

Another reason entrepreneurs hesitate is the dual burden of running the business and managing the sale. The business must continue to operate as usual, which can cause hesitation. Additionally, they are often unsure how to start the sales process and what exactly needs to be done. This is understandable, as you've focused your entire life on building and running a successful business. Selling is likely uncharted territory for you, and the role feels unfamiliar. This is why you should consider succession advisory services. Professional advisors bring experience from multiple business sales and know what it takes. They can relieve you of the burden, allowing you to concentrate on running your business while managing the sales process.

Early Planning is Key for Selling Your Business

A successful entrepreneur identifies market opportunities and growth possibilities early. The same applies when planning to sell a business. To keep the sales process short and ensure a quick, successful transition, don't underestimate the time required. Early planning and hiring a competent advisory team give you the upper hand. A well-prepared business can achieve a significantly higher sale price—up to 70% more—and reduce the duration of the sales process.

Addressing the emotional burden early can also help minimize it. You should be aware of your fears, desires, and goals, so you can find a suitable advisory team based on these.

There are many advisory firms and consultants, but not all are right for your needs. The clearer your goals, the easier it is to select the right advisory team. Test potential advisors in a personal conversation. Determine if the transaction advisory team has an extensive network of buyers and has successfully managed projects similar to yours.

Well Prepared is Halfway There

Once you've found the right advisory team, they will work with you to define the handover process and establish a clear structure. This clarifies roles and responsibilities, allowing you to be well-prepared for the process.

However, the preparations don't end there. Up until now, the focus of business management has been on successful operation. Now, it's about preparing your business for sale. These steps should definitely be taken with your advisory team:

• Review and streamline your business concerning unprofitable assets.
• Separate personal and business assets.
• If your financial statements have been optimized for tax purposes until now, they should now be optimized for the sale value.
• Organize your business so it can succeed without you.
• Document business strategy, customer portfolio, organization, and processes for your successor. This makes evaluating your business easier.
• Engage key employees in your company.

Now that you understand the benefits of early planning for a business sale, you're one step closer to making the big move. The more time available, the better the advisory team can cater to your wishes and goals. It also allows enough time to find the ideal successor for your business. Proper preparation also ensures that the critical phase—the sales process—runs as smoothly and efficiently as possible.

For more information, check out our blog post 10 Valuable Tips for Selling Your Business.

Sales Analysis

Are you planning to sell your business? We offer a confidential and non-binding sales analysis for you, which includes the following points:

• Assessment by experts to determine if your business is ready for sale.
• Identification of potential matches through our buyer network.
• A free consultation with one of our succession and transaction advisors.

Request Sales Analysis

About CARL

At CARL, we help owners of small and medium-sized businesses find suitable successors. By using our platform-based technology solutions, you gain quick and easy access to a unique network of buyers. This gives you new options for business succession, previously available only to large companies. Our promise: a business transfer with a high probability of success, always focused on the interests of the entrepreneur.

Contact us – we look forward to meeting you in a free initial consultation to discuss possible strategies. CARL aims to provide comprehensive advice during this significant step, always prioritizing your interests.