Knowing when to sell your IT services business is one of the toughest decisions you’ll face. There are two key indicators, however, that signal the time may be right if your growth has stalled or stagnated to sub-10%: You’re no longer excited about driving new revenue, and the tax implications may be in your favor.
Selling your firm when it’s not growing can be so hard because you’ve poured your blood, sweat, tears, and countless hours into it. But if you’re not growing, that means you’re dying. That’s emotionally draining and can feel like the beginning stages of grief when you’re letting go of a precious loved one who’s on life support.
But eventually, you’ve got to face the reality of selling your business: the acceptance stage.
Flat, Sub-10% Growth
If you’re experiencing less than 10% growth, then you should consider selling your IT firm.
Here’s why.
If you’ve been in a groove where you haven’t seen more than 10% growth, it’s the telltale sign that you’re probably burnt out. And that’s OK, because none of us are superheroes. (Although some of us DO wear capes.)
Many IT services business owners we talk with who are facing stagnant growth are no longer excited about growing their firm. The idea of going into a growth season just isn’t as enticing as it once was.
If you can relate to this stage, then you’re probably not feeling excited about going into the office anymore either. After all, it can be a grind putting out fires, dealing with client issues, training new employees, and constantly retooling the suite of software you’re offering.
It’s stressful—and mindset is a big part of growing your business. If you’re not in the right head space anymore to go for growth, then it’s time to sell.
Tax Implications
The second reason to sell is for tax purposes. Here’s some interesting tax stats sure to open your eyes on why you should sell now:
- More than 60% of IT professionals who sold their businesses say they didn’t feel they received what they deserved when selling because of a poorly designed valuation and tax strategy.
- Calculation of taxable income is one of the most common challenges in selling your firm, according to Forbes, which heavily impacts your sales price and valuation.
