I am hesitant to sell my business right now. How do I weigh the cost of waiting against the benefits of an immediate exit?

Question

Tyler Smith · Accepted Answer

This is a classic strategic real options problem. When you decide to wait, you incur a flow cost. This flow cost includes the daily operational stress, the market volatility risk, and the continuous capital reinvestment required to keep the business competitive. You must ask whether the potential future upgrade in your business value will outweigh these ongoing flow costs. If you choose to wait, you must actively upgrade your business quality rather than just coasting. Coasting actually degrades your value. Use your EOS® framework to aggressively tackle your issues and scale your operations during the waiting period. If you can use that time to hire a president to replace you, you drastically reduce your personal flow cost of waiting. However, if you are personally burned out and the business is slowly declining, waiting is a losing strategy. The hidden cost of waiting too long is that you may end up selling during a market downturn or when your personal health forces a hasty, less profitable exit. Real options analysis shows that timing your exit requires objective assessment of your operational threshold.