Choose the right time to sell your business
How do you know when you should sell up? We look at the signs that indicate it’s time to move on
Ian Luckett knew it was time to sell his family’s coach-travel business, Lucketts Travel, when he and his brother, Steve, decided they no longer wished to do “six days a week at the coalface”.
Their hard work had certainly paid off in the preceding years. Lucketts had become the largest coach operator on the south coast of England, employing 350 people and running a fleet of 160 coaches and buses. Yet as the business had grown, the brothers realised it might be time to hand over control to an owner with more experience of running a big company.
“We weren’t necessarily that good at managing people,” says Ian. “We were too much in the detail, and the business had grown so much that it needed a different structure. It needed to be more hierarchical, which meant it was going to be a different business. We knew it had to change significantly to carry on growing, and we knew going through that pain was going to be difficult for us.”
Deciding when to sell your business is among the most difficult decisions you will have to make as an entrepreneur. The process is often long, stressful and can collapse at any moment.
However, if you ensure the business is in good shape, has a demonstrable track record and a clear plan in place for future growth, then the chances are a buyer will be interested. The proceeds can help you move onto the next stage of your life, whatever that might be. A St. James’s Place Partner can offer advice on how to use the proceeds of a business sale to plan for your future.
There are a number of signs that it might be time to think about selling. Among them is that you have achieved all you want to and have tired of the daily grind, much like Ian and Steve with Lucketts Travel. They sold the business in 2020 to National Express, the giant transport company listed on the London Stock Exchange. It allowed them to finish on a high by passing their business onto new owners.
“We didn’t really want that [daily] involvement,” says Ian. “As much as we could have had people running the business for us, it’s never as easy as you might think it is. You’re still emotionally and financially invested in it. If you give someone else the train set to go and play with, they’re never going to be as invested as you are, no matter what they say.”
Another sign it’s time to look for an exit is the realisation that you have taken the business as far as you can with your skill set and it’s time to find a custodian able to take it to the next stage. The market might also be conducive for a sale, or you might be forced into selling because of unforeseen circumstances.
Whatever happens, it pays to be prepared as you head towards a sale. In the years running up to the deal with National Express, Lucketts Travel consulted with us to prepare the company. It helped Lucketts put a structure in place that would appeal to a potential buyer. Many entrepreneurs fail to do this because they have built the business around their own expertise, which works while they are running the company but not if they’re trying to sell it.
Crawfurd Walker, our Chief Revenue Officer, says: “Some people want to sell, but they’re not in the right shape. Seventy per cent of companies fail to sell the first time they do it because they don’t have the right structures and processes in place, or it’s too based around the business owner.”
Thanks to working with us, Ian was able to give Lucketts Travel a clearer structure and develop its senior management team. He also began to gain a better understanding of his own skills, giving him confidence as he negotiated a sale of the business.
“I’m not an expert in anything, but I could talk to someone quite knowledgeably about a balance sheet, about a P&L [profit and loss account], about the inside of an engine, about an HR issue, about the law, insurance,” he says. “I didn’t quite realise how much I knew about stuff.”
This article is written for the St James’ Place Entrepreneurs Club newsletter.