Guest Columnist: The Pitfalls of Waiting to Sell Your Jewelry Business

The Pitfalls of
Waiting to Sell Your Jewelry Business

Timing a business sale is never an easy task, especially in
today’s volatile market. Much like the value of your home, there is often no
good way of telling what the future will hold. The economy has only complicated
matters as jewelry store profits, cash flow, and overall values continue to
fluctuate.

With the recession taking a firm hold on the business-for-sale
marketplace over the past few years, many owners may be asking themselves when
the right time to begin the sale process will come. Will the economy rebound
soon? Will that boost valuations? How will it affect the number of buyers and
sellers on the market?

These are all things jewelry business owners should consider
and we have seen a slight improvement in the market as of late. But while some
might be tempted to wait a few more years for better prices, there are several
issues that could cause this strategy to backfire. Here are just a few of the
possible pitfalls of waiting too long to sell your jewelry business:

A Slow Recovery

While we’ve seen a few positive
signs, a full economic recovery is still a long way away. Too many owners are
waiting for their businesses to spring back to the profit levels they were
seeing pre-2008. But a quick fix isn’t going to happen anytime soon. Jewelry
store owners who are emotionally and financially ready to sell need to start
the sales process now and take the necessary steps to maximize their business
value. Even if sales are slow now, many experts have tossed around the phrase Flat is the new up. If your numbers are staying consistent, consider that a
good sign that your business will be in demand on the market.

Increased Taxes

Many business owners scrambled to sell their assets in 2010
in fear of the expiring capital gains and personal income tax rates. The
government decided at the last minute to extend those taxes another two years,
giving business owners more time to enjoy low rates. But don’t take these two
years for granted. Eventually, most likely in 2013, the capital gains and
income tax rates will increase and the hike will have a drastic effect on your
sale. For example, a capital gains increase from 15 percent to 20 percent would
increase taxes $100,000 on a $2 million sale. That doesn’t include any federal
or state income taxes that will be increasing and taking an even larger portion
of your proceeds. So unless you can afford to lose that money or find a way to
increase your bottom line, selling before…another tax increase would be a wise investment.

Baby Boomers Retiring

The baby boomer generation is reaching retirement age. And
it is these baby boomers who own a large portion of the small business
industry. What this means is that once these owners decide to sell, it will
drastically alter the business-for-sale market. We’ve seen some of these
boomers sell in recent years but the majority have been waiting out the
recession. Whether you are one of those boomers ready to retire or their
eventual competition, you’ll want to sell before the majority of these businesses
hit the market. It will be tough to stand out once the market becomes flooded
with jewelry stores like yours.

The truth of today’s market is that no matter when you
decide to exit your business, you should already be in the planning stages. But
with issues like these looming, now may be the time get things moving at a
brisker pace. If you’re not getting the interest or offers you’d like, you can
always pull back and work on improving the business.  Waiting too long, however, could leave some
prime opportunities, and profits, behind.

Domenic Rinaldi is
president and managing partner of Chicagoland Sunbelt, a business brokerage
firm that focuses on helping people buy, grow, and sell businesses in Chicago
and the surrounding region. Domenic holds the professional designation of
Certified Business Intermediary (CBI) from the International Business Brokers
Association and is considered an expert in the business brokerage field.
Chicagoland Sunbelt is a proud member of Sunbelt Midwest with offices in
Minnesota, Wisconsin, and Illinois.