There is no set way to know when it’s the right time to close or sell your business. However, there are some factors to consider when making the decision.
Why are you selling or closing?
Consider the real reason behind your decision to sell or close your business, and make sure it’s the right one for you. If you’re selling your business, this is a common question that potential buyers will ask.
If you’re struggling with the decision or would like to talk to someone about your situation:
- Contact us by phone, web chat or our online enquiry form.
Have you talked to professionals, friends and family?
Talk to your business advisor, accountant or solicitor before you decide to sell or close your business. They can offer professional advice about the profitability of your business, and market trends for your industry.
You may also wish to talk to family members and friends for more personal advice on your decision.
Is your business still profitable?
The end goal of your business is to generate profit. If the business is no longer profitable, and is unlikely to be profitable in the future, selling or closing your business may be the best option.
The Australian Tax Office website has a business viability assessment tool you can use to determine if your business is still viable (if it still has the ability to survive financially).
Are you finding it hard to comply with requirements?
It can be hard to understand the different government requirements, regulations and standards that may apply to your business.
Before you decide to sell or close, you should know that there is help available.
The Australian Business Licence and Information Service (ABLIS) is a free online tool that can help you find out what state, territory, local and Australian government requirements apply to your business, including:
- licences and registrations
- permits and approvals
- codes of practice
- standards and guidelines.
If you’d like to talk to someone about your compliance requirements, contact us by phone, web chat or our online enquiry form.
Do you want to run your business anymore?
If you’re feeling tired from running your business, it’s important to ask yourself if you really don’t want to be in business anymore, or if you just need a break.
If you’re able to, try taking a break from your business for a while before you make your decision.
How will it affect your personal circumstances?
Carefully consider how selling or closing your business will affect your personal circumstances. Ask yourself if you’re really ready to sell or close your business, and how the decision will affect your lifestyle, retirement plans or income. If you’re not sure how it could affect your personal finances, try:
- talking to your financial planner or advisor
- using the free financial planning tools on the MoneySmart website.
Have you considered other options?
Other options include transferring ownership of your business to a family member or friend, or bringing in outside management to help you run it.
It’s difficult to go back after you’ve sold or closed your business, so make sure you carefully investigate all your options. To prepare for selling, closing or transferring ownership of your business, consider creating documentation such as a succession planning guide.
Is your business marketable?
Market trends can give you an indication of whether it’s the right time to sell. Questions you can ask include:
- Is your business idea is still valuable in the current market?
- Is your business likely to become more valuable in the future?
- Could you sell your business for a better price if you waited?
Find out how to value your business, to get an idea of how much you could sell your business for.
Read our market research topic for information on conducting market research and finding government statistics.
Will you be restricted from trading after selling?
There are some contract clauses that will restrict you from trading in your profession after the sale of your business. These clauses are often to prevent you from competing directly against your sold business. Make sure you’re aware of all the terms and conditions of the contract before deciding to sell.