Contrary to mainstream belief, very few businesses actually sell. There may be a few reasons for this. One of which we will answer in this blog, "Is Selling Your Business Really Worth It?"
Let's start with a statistic.
According to the Business population estimates for the UK and regions 2023, there are 5.51 million SMEs, which make up 99.9% of UK private sector businesses. 5.51 million of these are classed as “small” (0 to 49 employees).
Micro-businesses have 0-9 employees. In 2022, there were 5.2 million micro-businesses in the UK, accounting for 95% of all businesses.
With that said, the majority of UK-based businesses are classified as micro.
Micro businesses have the hardest time successfully selling.
They are often heavily owner-dependent, have high revenue dependency, have unprofitable financials, and offer too many services, creating a chaotic business that is very difficult to take over and grow.
What makes it even harder is that the seller usually expects a fictional figure, which doesn't allow the buyer to make a worthwhile positive return on investment.
If you then take into account potential fees involved in selling a business (accountancy, business broker/advisers, legals, consultancy, tax and more) the eventual payout can become relatively small.
Selling isn't always about an eventual payout.
Closing a business can be expensive, stressful, difficult and unrewarding.
The brand will die, customers will have to go elsewhere, your team will need to find new jobs, and you will have to deal with all your compliance and insurance details.
Your business may even be obliged to continue long contracts, leases, service agreements and possible tax liabilities. You could have to spend money from your business, which is no longer generating income.
In some cases, businesses sell for a nominal amount of just £1 to allow the seller to pass over the liabilities listed above and move on to the next stage of life.
So, is selling your business really worth it?
... It depends.
An ideal position is one in which you are heading towards retirement in 3-5+ years; your business is highly profitable, doesn't rely on you, has a diverse revenue base, has a great team in place, and has real opportunities for growth and scalability.
If you can plan in advance and begin working on making the above possible, you will be in a great position to sell your business at a premium price and selling your business will be a truly worthwhile experience.
It can still be worthwhile to sell your business if you can't satisfy the above. However, those situations will need to be reviewed on a case-by-case basis.
What next?
If you would like to speak to one of our directors about the potential of selling your business, please get in touch to schedule a call.
We will always act transparently and share the realities of a business sale, allowing you to decide whether your business is really worth selling.
T: 02920 025 852