Even from the earliest stages of their freelance businesses, owners frequently focus on how to keep the company growing at a steady rate. That may mean aggressively promoting the enterprise on social media, working hard to show customers what makes the company different from others and tapping into a niche market, for example.
Many freelancers investigate ways to diversify their income sources. For example, you may have earnings from ad traffic or decide to sell e-books or tickets to virtual seminars that people can attend to learn about your area of expertise. Most highly effective business growth tactics also increase the prominence of the business.
Eventually, you may get invited to events where you can talk about your business and products or services, increasing awareness even more. Media coverage may also follow, particularly since people love reading about freelancers who started small and gradually built their organizations.
Such factors can collectively grow your business. The growth may continue if you hire employees and those people are as excited as you are about the company’s direction. They could, in effect, become ambassadors to the business, increasing the attention paid to it.
Once the interest becomes substantial enough, you may be in an excellent position to sell your freelance business.
Here are 7 tips to help you decide when to make that move, plus the possible advantages and disadvantages of making the sale.
1) Have a Plan in the Works for a While Before Selling
There’s a chance that an offer to buy your business will come out of the blue when you least expect it. However, you’ll be best prepared to evaluate any proposals once you already have an intention to sell. In some cases, people never think about selling their freelance businesses, and by not considering that option, they may miss lucrative opportunities. They also may realize that selling isn’t suitable for them.
It’s smart to set a “sell by” date for your business, even if you don’t think you’ll follow through with it. That’s because once you have that future goal, you’ll be especially motivated to grow the business.
Since you’re reading this, the possibility of selling has likely taken root in your mind. If you’re still wavering about whether to sell at all, put aside any prospects until you’ve come to a more confident decision. Otherwise, you may be so taken aback by an offer to buy that you accept it too hurriedly without thinking of all the potential outcomes.
2) Ensure Your Business Is Easily Transferable
Buyers want businesses they can start running as soon as the transfer of ownership gets finalized. But, it’ll be difficult to make that smooth transition if you have shortcomings in your record keeping practices. Don’t get serious about selling until you can produce records about the companies finances, clients, operating procedures and other essentials.
It’ll be difficult to attract buyers and sell the business for its maximum value if you can’t provide paperwork that proves the businesses’ success and assures the buyer that they’ll be able to run the company profitably without encountering numerous unforeseen pitfalls.
Now is the time to get any paperwork together that’ll help you transfer the business to its new owner. If you’re not able to do that yet, hold off on selling until you can.
3) Assess the Value of Your Business
If you don’t have a feasible idea of how much you could expect to profit by selling the business, devote some time to conducting more research. You can start by searching for details about acquisitions of companies similar to yours by reading recent news stories. There are also platforms like PitchBook that offer information about mergers and acquisitions.
Numerous factors can affect business valuation, including its size and industry. For example, if your freelancing company is tech-related, it could sell for more than if it were related to a sector that’s not in such high demand. Also, larger, more profitable companies tend to sell for higher prices than those that are smaller and less profitable.
Speaking of profits, the company’s financial health is a significant factor that connects to its overall value. Net income and annual cash flow are two of the many aspects potential buyers assess when deciding whether to buy.
4) Recognize That Gigantic Companies Could Cause Permanent Disruptions
Many freelancers make substantial amounts of money with help from huge companies like Amazon and Google. The problem is that those companies have their profits in mind above all else and won’t be concerned if they make changes if they cause freelancers’ businesses to falter.
If you lie awake at night fretting that the next Google algorithm or new rule for Amazon sellers could be your downfall, now could be the time to sell. That’s especially true if the business is doing exceptionally well and you’re worried something might change soon that’s outside of your control due to the actions of large enterprises.
5) Consider Your Other Priorities
You might also feel encouraged to sell your freelance business if it becomes evident that other things in life are significantly more important than your business, and you’re ready to devote time to them.
Maybe your mother received a dementia diagnosis, and you’re considering having her move into your basement apartment that you currently use as a home office. Or, perhaps you’ve realized you want to make good on a promise you made to yourself a few decades ago to travel the world.
6) Find a Business Broker
A business broker can assist you by preparing a prospectus and tapping into an existing network of potential buyers. However, instead of hiring the person who takes an interest in your company, think about the individuals who are likely to be interested in purchasing your business.
For example, if you’ve built the business by being a freelance writer focusing on topics that help people live better, you may find a buyer who has an existing content strategy but wants to take more of a lifestyle focus moving forward.
An ideal business broker should have experience with the kind of business you own. However, it’s your responsibility to dig deeper and ask targeted questions that help you verify the person’s credentials and ensure they are genuinely interested in learning about your business. After all, if a broker doesn’t understand the inner workings of your freelance company, they’ll have difficulty marketing it properly.
7) Weigh the Pros and Cons
Selling your freelance business is a huge decision — and one you should only come to after thinking carefully about all the potential advantages and pitfalls. Consider coming up with those factors alongside people who know you well and understand how the business operates. Often, such outside perspectives can help you realize new, valuable things.
The pros and cons of selling are different for every business and are primarily dependent on the circumstances that caused you to consider selling. However, some of the advantages may include:
- You could leave the company with cash to use toward other things
- Selling could give you more time to devote to other business ventures or interests
- You could use your skills in ways that are more varied than what the company allowed
- Some deals allow you to sell the business but remain involved to some degree
- If your business is your most valuable asset, selling it could allow you to diversify assets
Meanwhile, some potential cons are:
- Making a typical small business selling mistake and relinquishing control to an inexperienced person who makes the business go under
- The negative impact on your employees who no longer have jobs after the sale
- The potential of missing out on growth and prosperity opportunities that occur once the business is in the hands of a buyer
- If the transaction becomes complex, the negotiations may go on for an extended period
- Many buyers require sellers to sign non-compete agreements, which would likely limit your ability to start a similar business if desired
It’s Not a Straightforward Decision
Now that you have guidance about when to sell deciding if the time is right to put your freelance business up for sale should become more natural. However, the company is something you’ve put a tremendous amount of time, effort and talent into so that it would reach the point of being ready for sale.
With that in mind, don’t become discouraged if it takes you longer than expected to finalize your choice about selling. Regardless of what you decide, it’ll inevitably affect the rest of your life.