Every business goes through a number of stages during its life. It’s usually borne out of passion and excitement from the owner, goes through a period of success, reaches a plateau from which further growth may or may not happen, and eventually reaches a final plateau from which the only way to go is down.
That final plateau is often paired with a reduced interest and passion from the business owner, a person who may have grown tired of that particular business or is just content with the current level of success of the business.
I’ve certainly seen this happen time and time again in small businesses in my community. We all know the businesses that seem to do the same thing day in and day out. The business storefront is gradually looking a bit more dated, a little less cleanly, and a little more dreary as time passes. There are no new promotions, activities or products on display; instead, you just see a repetition of what’s gone before.
The fire is gone, but the business remains.
Some businesses can go on for years and years like this. I know of one particular hair care business where the owner has obviously had minimal interest in the business for many years but keeps the doors open thanks to a cluster of extremely loyal clients who mostly just enjoy the comfort of chatting with a familiar face.
Other businesses are quickly drowned out by new competition, as when a local auto parts store went under almost immediately when a NAPA moved in a few blocks away.
The key is to identify that moment when the fire burns out but the business remains, still holding much of its value. That is the precise moment when you should sell the business, as it retains maximum value and hasn’t degraded over a period of time with an uninvolved and uninterested owner.
How do you know when that time has arrived? I usually suggest that people look for three things.
First, are you as excited about the business as you were six months after it started? Think back to how you felt about a day spent improving your business in the early days compared to now. If those days seem wonderful and full of some energy that you can’t possibly imagine having now, then your fire may be burning out.
Second, has the business seen any growth over the past two years? Two years is a simple rule of thumb here. What you’re looking for on a superficial level is an indication as to whether you’re holding steady or gaining ground against any potential competition in your area. What you’re looking for on a deep level is whether you care about that rate of growth. Do you feel a desire to do the hard work it takes to increase that rate of growth?
Finally, how are you spending your time and thoughts? Are you spending your spare hours building the business? Are your thoughts in your spare moments flooded with thoughts on how to improve your business? If you’re dreading the time spent there and your thoughts are elsewhere, you may find yourself holding a business where the owner’s fire has gone out.
If you find yourself in this situation, move on sooner rather than later. The longer you hold on, the lower the value of your business. Seek out potential buyers through groups such as your local Chamber of Commerce and get the most value you can for your business, then move on to another endeavor, one that can light your fire like the early days of your existing business.
Give your business the proper send-off that it deserves and use the proceeds to light that entrepreneurial fire inside of you one more time.
Image credit: upturnedface