When I began investing in the stock market, I was great at picking the stocks that would shoot up 25%, 50% , 100% but invariably held on to these too long and watched them come right back down. I can still name them today, Tempur Pedic, Jones Soda, Lucent and Under Amour; just to name a few. It wasn’t until I learned to develop an exit strategy for each stock I purchased that I began seeing some serious growth in my portfolio.
Business owners start their companies and run them every day never giving serious thought to when they should cash out. This is a serious mistake. As we’ve all learned from the past five years, things change and there are many factors that are outside of our control. Key employees leave, economic trends fluctuate, and competition can come out of nowhere. Just like with stocks, each small business has an optimal time to sell it.
Procrastinating when it comes to thinking about selling your company can cost you dearly. Educating themselves on the selling of their business should be included in the top priorities of each business owner. It should rank up there with increasing revenues, reducing costs and managing cash flow.
The worst plan is no plan at all.