When it comes time to sell the business you've put your heart and soul into, you will likely experience some uncertainty mixed in with the excitement. That doesn't mean you aren't ready for this transition, but you should reflect on whether it's truly the right move for you and your company.
Contemplating this opportunity includes asking the right questions. These six entrepreneurs share the questions you should consider before you sign on the dotted line.
Why am I selling my business?
Entrepreneurs should always be thinking about the "why" of their business, and the same is true when it comes to selling. Murray Newlands, founder of invoicing and expense tracking software company Sighted, recognizes that you don't just need a reason to sell -- you need a valid one.
"You want to determine if it's the right time in your own career and in the industry to sell. It's important to have a valid reason beyond 'I need to cash out for the money,'" says Newlands. "When I've sold businesses, it's been hard because I was so emotionally invested in the companies, but I was also excited about a new idea I wanted to explore."
Is this the right buyer?
"Selling a business is a very emotional event," says Diego Orjuela, CEO and founder of Cables & Sensors, a patient monitor accessories company. One part of the process that can be particularly emotional? Working closely with the team that will be taking over.
"When I sold my first company in the early 2000s, I didn't realize how much I was going to work with the buyer and how emotional of a process it would be," he says. "Make sure that the team you are selling to is one that you enjoy working with."
What does this mean for my people?
Dan Golden, president of digital marketing agency Be Found Online, knows that the true value of a company is its people -- so he considers everyone who will be affected by the sale.
"My co-founder and I have turned down offers to buy our company, as we didn't see it was in the best interest of all stakeholders. A founder needs to understand that human capital is the real value of their company. They need to ask, 'Is this good for everyone on my team?'" says Golden. "The full potential of an earnout won't be realized if the team doesn't buy in."
What is the opportunity cost?
It's important to think about how selling your company will affect your opportunities going forward. Richard Kershaw, CEO of web hosting tool WhoIsHostingThis.com, cautions against signing on the dotted line before considering the longer-term ramifications.
"In the excitement of an offer to sell, it's easy to forget that you'll be asked to sign a non-compete -- and the terms were far broader than I expected," says Kershaw. "One offer to sell my business would have prevented me from working in many dozens of adjacent markets worldwide for five years."
Did I accomplish what I wanted...?
It's hard to quantify how ready you are to sell, but reflecting on what you have accomplished is a good place to start. Cynthia Johnson, co-founder of personal brand development and management agency Ipseity Media, understands that selling before you're ready to move on can lead to regret.
"You have to make sure you did everything you set out to do with the company before passing it on so that you feel satisfied," she says. "You don't want to regret not doing more, so think about that before putting it up for sale."
...and what do I want to accomplish next?
"Before selling my business, I wanted to make sure it was the right thing by considering what I actually wanted to accomplish next," says John Rampton, founder of online invoicing company Due. Outlining your next steps and getting excited about what's to come is a good sign that it's time to sell.
"If you can't think of anything you really want to do more, perhaps it's not the time to sell your business," he says. "If you have ideas to explore, start formulating them so you can take those proceeds and pour them into something new immediately after."