Of all the choices a business owner makes, few are more important than the decision to sell. Accepting an offer for your food service business can leave you free to enjoy the fruits of your labor, but only if you do so under the right circumstances. To know if the time is right, consider:
Reasons Not to Sell
If you’re feeling burnt out by your business obligations and the hospitality industry generally, selling may seem like the best way to move on. In fact, feeling exhausted or bored indicates that now is the worst time to consider offers for your company. Business owners who aren’t excited about their industries often underestimate their firms’ value. You could end up accepting a much lower offer than you deserve. Only when you have regained some of your passion for hospitality should you consider a sale.
Besides feeling burnt out, many business owners choose to sell when they are struggling to turn a profit. Selling at a low point, however, ensures that you will get less for your company than its inherent worth. Remember that the hospitality industry is subject to endless shifts in demand, many of which are entirely outside of your control. The rise of new vacation options in other countries, for example, may temporarily divert international visitors away from Queensland, lowering profits by reducing the number of potential customers for your restaurant. If you can wait for our state’s tourism industry to rebound, you can become profitable again and demand a higher price for your firm.
The Right Times to Sell
Rather than accepting an offer during times of low profits and burnout, you should sell your business when you:
Have Reached the Peak – The more you expand your hospitality business, the higher the costs and lower the benefits of growing further. When you don’t think you can profitably expand any more, you should sell. One sign that you have reached this point is when your facilities begin to compete with one another rather than with other companies. If you open a new restaurant and find that it takes business away from your existing ones, for example, your company is likely as valuable as it will ever be.
Foresee Market Troubles – Besides reaching your own business’s peak, you should also sell if you think the hospitality market as a whole is about to contract. Say that your restaurant specializes in meat dishes, but you learn that there is a growing trend toward vegetarianism. This trend will decrease demand for your services, so you should sell before it gets underway.
Have Trouble Adapting – With the rise of food delivery apps, restaurants have had to invest heavily in new technologies to stay competitive. If you have trouble understanding these technologies or incorporating them into your business, you will likely struggle to stay profitable. You should sell now, getting yourself the best price possible before profits fall and giving the new owner time to invest in the necessary technologies.
Whether you’re ready to sell your hospitality business or want to keep running it a little longer, Redmako Business Sales offers the resources and advice you need for success. For more information or to find a buyer, contact us today.