Should I consider selling my business or licensing my products?

Deciding between selling your business or licensing your products is a significant choice and depends on several factors. Let’s break it down so you can evaluate which path might align better with your goals and circumstances.

Consider Selling Your Business If:

1. You’re Ready for a Change: You might feel burnt out or simply ready to move on to different ventures. If managing day-to-day operations no longer excites you, selling can free up your time and energy.

2. Market Conditions are Favorable: If your business is operating in a hot market or you receive an impressive offer, selling could provide you with substantial capital to pursue other opportunities or fund your lifestyle.

3. You Want to Cash Out: Selling can provide a lump sum that might be appealing, especially if you have another project or investment in mind where you want to direct your resources.

Consider Licensing Your Products If:

1. You Want Passive Income: Licensing allows you to earn royalties over time without having to manage the business actively. This could be a good fit if you’re interested in maintaining an income stream while working less.

2. You Believe in Long-term Growth: If you see potential for your products to continue performing well over the years, licensing can allow you to benefit from their continued success.

3. You Enjoy Certain Aspects of Business Ownership: If you’re not ready to let go entirely and want to stay somewhat involved, licensing allows you to maintain ownership while outsourcing manufacturing and distribution.

4. You Want to Test the Waters: Licensing can be less final than selling the entire business. If you’re uncertain about giving up ownership, it can be a way to gain financial benefits while retaining some control.

Reflecting on my experience, when I left my engineering career to embrace creative work and entrepreneurship, I constantly faced crossroads like these. In moments of indecision, I applied the Capture, Develop, Expose framework. Capture your true motivations for considering each option; Develop a clear understanding of potential outcomes, risks, and impacts on your lifestyle; and finally, Expose yourself to examples of others who’ve made similar decisions.

My advice? Don’t rush the decision. Define what success looks like for you personally and how each option aligns with that vision. Consider talking to a financial advisor or a mentor who understands your industry to gain additional perspectives. Whatever you choose, make sure it both supports your financial goals and nurtures your personal growth.