A new year brings a fresh start. For many, it’s a time to reflect, regroup, and create resolutions to improve in the new year. Resolutions often focus on health, happiness, and career. If one of yours is to get the ball rolling on selling your HVAC business, January is the perfect time to begin.
Like everyone else, you’re motivated to make goals and significant changes in the new year. For those who want to buy a business, the drop of the ball at midnight may activate their timeline to start looking. Many will want to do it before the first quarter ends.
In addition to using that new year momentum, 2024 will bring more confidence to entrepreneurs that the COVID-19 pandemic is in the rearview mirror and that life is back to normal. Nobody will be concerned about lockdowns rocking the business world; enough time has passed to feel confident again. Here are four more reasons why selling a business in January might be your best move:
1. Increasing Interest Rates
Small business loan interest rates are at record highs and not projected to decrease any time soon. They are more likely to rise than decrease. Buyers may want to lock in these “lower” interest rates earlier in the year before they increase anymore. Now mean buyers have more buying power (they can afford to meet a higher buying price.) Plus, there are various alternative lending sources available to buyers. This broadens the pool of prospective buyers who can get a loan approval for financing.
2. Taxable Income
Since it’s earlier in the year, you shouldn’t have much taxable income yet. Selling early can help you with taxes on the sale. Your trusted team can help you with these details. See below for who to include on your team to help you prepare to sell.
3. High Demand
Now that the post-pandemic normalcy has been steady for over a year, entrepreneurs are ready to make strong moves. During the pandemic, many entrepreneurs set aside their money and paused plans. Now, there is a high demand to get back into the game and invest.
4. Available Jobs
For those aspiring to be entrepreneurs, the new year is an opportune time to take that risk. The job market is strong. People have the assurance that there will be work for them if their plans go south. It’s much easier to take a risk when you have a reliable backup plan.
What You Should Keep In Mind This Coming Year
Despite the economic hardships for most businesses, HVAC companies had record years during the pandemic. This is mainly because people were home more to notice issues with their systems. Buyers looking to buy an HVAC business obviously want one that is profitable, so it’s harder to stand out when everyone is thriving. Here are some additional factors that may make it challenging to sell your HVAC business the longer you wait:
- Baby Boomers Are Retiring: About 10,000 baby boomers celebrate their 65th birthday every day. This boomer retirement wave is creating more inventory for buyers. All of the competition will make it harder for you to sell your business. This is excellent motivation to sell now instead of waiting and selling at a lower price because of the supply and demand.
- Supply Chain Issues: The pandemic is over, but many businesses continue to blame it for their supply chain problems. This has created many conflicts for companies in the last couple of years. There are mandatory equipment changes coming up that could cause more problems as well, so supply chain issues are something to watch in the new year. It may be worth it to sell now because supply chains continue to have more and more disruptions.
- Rise In Taxes: Financial experts predict that there will be higher capital gains taxes, which affects how much profit the seller takes upon selling their company. Capital gains rates could rise exponentially in the future. It’s hard to predict, but it’s something to keep in mind.
Preparation Is Key: Assemble Your Team
One positive thing from the pandemic is that business sales cycles are shorter than pre-pandemic. The pandemic forced us to do so much work virtually, and we all realized how much time it saves us. That said, preparation is as necessary as ever in selling your business.
Start preparing to meet your goal to sell before the first quarter ends. Prepare by assembling your trusted team, which includes a reputable:
- HVAC business broker: They will be your guide throughout the whole process. They can offer their expertise, list your business for sale while maintaining confidentiality, and be by your side to dot your i’s and cross your t’s for an effective transition.
- Attorney: Your attorney is there to help you draft documents, translate contracts, and ensure the entire transaction is legal and proper.
- Accountant: Your accountant organizes the financial records and prepares to show potential buyers an honest and straightforward picture.
People often say the best time to sell a company is five years ago. Don’t let your fears keep you from making that power move. You’ll be kicking yourself five years from now because you didn’t do it at the right time. The decision to sell your business can be a tough one to face. But if it’s time, do it at the start of the new year, and we’ll help you to get the best bang for your buck.
Video
Infographic
As the new year brings fresh beginnings and resolutions, consider the opportune moment to sell your HVAC business. January offers a strategic start, especially with rising interest rates and favorable tax conditions. Learn more about the top reasons why January is the perfect time to make a business transaction in this infographic.
