Common Reasons for Selling a Business

As the owner of a business, there might be several different reasons why you’d consider selling. These can range from personal preference all the way to essential financial decisions, and at Utah Business Consultants, we’re here to help you formulate a smart exit plan if you’ve decided to look into selling your business.

As a primer, it’s good to understand some of the varying reasons why people sell their businesses or transfer ownership. Let’s go over the two broad categories of sale here, plus a few specific examples.

Planned Vs. Unplanned Sale

In general, there are two main categories for the sale of a business: A planned sale from the beginning, or an unplanned sale motivated by a specific event. Many owners enter a given business with the long term plan of selling the entire time – they work to build a business up to a certain threshold, then sell for a profit. In other cases, owners will recognize well in advance that selling is the prudent financial move, and will start taking these steps.

In other cases, specific events will necessitate the sale of a business. These could include personal issues like divorces or partnership disputes, or they could refer to specific business crises or debt issues. They also can happen when an owner dies and heirs have no interest in operating the business.

Competition

One common instigator for a business sale operates slightly between these two broad types: The rise of additional competition. Maybe a major competitor enters the market and threatens your competitive advantage. Maybe two competitors merge together, placing new pressures on your company. In some cases, bigger box stores pushing into niche spaces that businesses occupied forces a sale – smaller businesses simply can’t compete with these stores in terms of promotion and scaling.

New Technology

Another possible reason for selling a business is technology moving past a given business. New technology from a competitor might outdate the way you produce or market your products, rendering your business model obsolete and forcing a sale.

For more on common circumstances that may force a business sale, or for information on selling a business, speak to the pros at Utah Business Consultants today.