It’s no surprise that the COVID-19 pandemic has directly affected business in many ways. It was challenging for small- and medium-sized business owners to manage their daily operations while still complying with the federal and state mandates regarding the deadly virus.
It’s important to note that more people are getting vaccinated, but the risks of contracting COVID-19 are still something customers consider. With the emergence of the Delta variant, many are uncertain when the pandemic will officially end.
Now is a good time to consider your business goals and what it’ll take to achieve them. Some companies could not withstand the disruption, while others found new ways to reach their customers and are reaping the financial benefits. If you’re thinking about selling your business, 2021 might be the right time.
Before diving into why now is the best time to sell your business, you must address your own reasons for selling. You’ll be asked myriad questions from potential buyers about why you want to sell, what your customer base is and what your market penetration rate is. It’s vital to have the answers to these questions when you begin your preparation to sell.
Here are some of the reasons why some business owners should consider selling.
1. We’re in a Buyer’s Market
Business owners looking into the mergers and acquisitions industry will find a market that favors the buyer. Professionals interested in buying a business are at an advantage. There’s strong demand for purchasing lucrative companies, and buyers are looking for organizations that could withstand the effects of the pandemic.
2. You’ll Have to Adjust to a Post-Pandemic Business Environment
During the height of the pandemic, businesses had to make a digital transition to improve productivity, implement work-from-home policies and keep up with mask and social distancing requirements. Companies were forced to adapt, and that trend will likely continue.
If you find you’re using up your resources to make these necessary changes, you may realize it’s better to sell your company instead. In addition, the pandemic has altered business owners’ lifestyles, and some may not be able to keep up with changing customer demands and expectations. Be sure to assess your current situation and look for opportunities to sell if you find that your business won’t withstand the “new normal” in a post-pandemic environment.
3. Avoid Falling Victim to Financial Struggles
In a study of 5,800 businesses, it was found that 43% had to temporarily close their doors as a direct result of the pandemic. Many companies could not manage to stay afloat and were struggling financially. It was challenging for small operations to make ends meet. Because of this, now may be a good time to sell before you fall victim to these types of financial issues.
4. Prepare for Your Retirement Early On
The country could certainly improve its existing retirement system, but it’s your responsibility to ensure financial stability for yourself and your family. One study found that 50% of Americans are at risk of falling behind in retirement savings. If you plan on selling your business, you could earn enough to better prepare yourself for retirement when you reach the appropriate age.
5. Keeping Your Business Involves Risk
As markets fluctuate, it can be challenging to know if your business is considered high-risk in the industry. However, it’s important to note that there are different types of challenges involved with running your own business. Addressing them will help you determine if selling your company is the right move for you and those who rely on your financial resources. If the risks outweigh the benefits, it may be the right time to sell and develop your exit strategy.
6. Current Tax Rates Work in Your Favor
Taxes can increase in the future, but taking advantage of current rates, which come out to around 20% during a business sale, is a wise move. This is a good reason to consider selling your business — future tax rates may not be as attractive. Based on current predictions, the burden you’ll incur could jump to 39.6%.
While these are only a handful of reasons you should consider, it’s essential to make the decision that’s right for you and your business. Do diligent research into possible merger or acquisition opportunities, and consider consulting a professional who can guide you through this process.
Selling Your Business in 2021
Deciding to sell your business comes with pros and cons. You may determine the risks associated with selling are not worth the time, energy or financial gain. Consider these reasons as to why you should look into selling your company and what benefits you can reap.