3 Reasons why it’s a good time to sell your business now

Is it the right time to sell your business?

According to business expert Gene Marks, the answer is, “Yes.”

Marks explains his case for that statement in a video produced by The Hartford. He notes that the sales of businesses are up 50% this year over last–and the trend is slated to continue.

when to sell your business

But why is now the right time to sell your business? He outlines the three main reasons you shouldn’t hold off on the sale of your business (if you are ready to sell.)

1. Aging Population

By 2016, population projections show that the number of workers in the 65+ age range are expected to jump by more than 80%, which includes a portion that falls into the business owner category. And as the Baby Boomer generation enters that demographic, the number of businesses for sale is expected to increase as well.

“We can expect to see about 20% of our business owners in the 65+ age range within the next 10-15 years,” said Marks. That means that more and more business owners are going to be selling their businesses and retiring. As a business owner that’s looking ahead, you should plan now for that increase in supply and be ahead of the surge. Right now might be your best bet for selling high before the market becomes saturated with options and have to lower your price tag to get some biters.

2. Low Interest Rates

The Federal Open Market Committee (FOMC) just recently voted again to keep the federal fund rate at 0.25% to encourage and stimulate the economy, which it has been at since 2008 when the economy had an emotional breakdown.

So what does this all mean? It means that since it’s so freaking low, the Prime Rate still continues at super-low 3.25%, which it’s been at since 2008. The Prime Rate is like the ‘base-line’ used by all banks and loan servicing organizations to set interest rate amounts on loans/lending products and services to be at “a competitive and profitable rate.”  It’s kind of like how most all gas stations in your area have about the same price per gallon within a few pennies of one another, (thanks to OPEC who set gas prices). But to give you a point of reference, the Prime Rate has ranged from 1.75% (1947) – 21.50% (1980), with the average at a ~9.842%. So 3.25% is pretty darn good.

If things were picking up more in the economy, the Fed fund rate would raise the current .25%, and by a domino effect, it would raise the US/WSJ Prime Rate. They don’t vote again on this until June, and there’s no indication they’ll raise it anytime soon. My guess is it’ll be probably another or few years before they do that.

prime-rate-flow-chart


Enough with the business talk — how does this affect my business?

This all means that business owners can borrow funds to grow their business for really low rates that we probably won’t see again in our lifetime. (That’s why it’s also a great time to buy as big of a house as you can afford and buy a car) Therefore, that cheap financing means it’s so much more attractive for people to buy your business now — getting financing is (getting) much easier (though some banks are still afraid to loan, but stats have showed they’re lending more and more the last few years), and there’s less risk for potential borrowers to get financing because it costs less to borrow money and purchase your company.

3. Low Inflation Rate

The current inflation rate sits at -0.1% as of April 17th, 2015, which means there are less alternatives for investments. Most bank accounts are only earning <1% interest, so more and more people are looking for ways to invest their money for a higher ROI. Entering the stock market is one option, but it’s been pretty volatile game. Many would argue that buying a business as a means of investment (depending on what industry, product, service, etc) because it has less risk and chances of a higher ROI.

Making the Sale

The stumbling block most business owners encounter when considering the sale of his or her business is that they let emotion influence their decision.

“You have to take a smart view of your business and remove the passion and emotion from the decision to sell,” Mark says. “Now is the time to get top dollar for your business, so it’s a decision that has to be made purely from a ROI perspective.”

Watch the video here:

Here’s another great resource to help you get more prospects and leads in your sales funnel:

How to Close More Sales in 30 days
Photo Credit: Seattle Municipal ArchivesFedPrimeRate.comSM

Devan Perine

Devan Perine works with small business owners on their marketing and multimedia efforts. She's passionate about helping businesses build their presence online, and giving Gen Y a voice in the workplace. When she's not working, she loves to make a mess in the kitchen, and play with her band around Chicago. She loves to chat! Give her a shout on Google+, Twitter or LinkedIn.

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