Open five months: Is this the time to sell our buisness?

January 21, 2010

Businesses that make a profit (total net to owner) that is increasing each year will be also increasing in value to a prospective buyer.  In this case, the value of the business for sale is increasing because both total $’s that go into the owner’s pocket positively influences the value as does longevity.
Most businesses are not making great money in the first year they are open and five months is not particularly representative of longevity.  Most prospective buyers are looking for stability, proof that the business really can make it.

My advice to the short term business owner is 1) if you can stick it out and put the energy, marketing, great management, and time into the new buisness, do and wait until the end of at least the second year or 2) acknowledge that you are likely going to get something less than the original cost of the equipment, perhaps the inventory, and not much more.  Find a broker to sell these assets for you.

In either case, keep the operation going as best you can to maximize the value to the prospective buyer.

Always, always, always try the have the business be the very best until the new owner takes over.

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