My of you have been reading in the newspaper that the economy is booming, interest rates are going up in Canada because there is inflation starting. Business is becoming very profitable, at least in certain industries, but for how long? Is the growth in business artificial? Will it be sustained?
What is driving the economy now is stimulus money for building infrastructure. Some people estimated that 20% of the money was spent in 2009, 60% will be spent in 2010 and the rest will be spent next year. Does this artificially stimulate the economy – definitely. When the stimulus money runs out, people will have spent money sooner than they would have otherwise spent. As a result, will there be a lot of orders when the money runs out? Some people believe that the economy will dip again when the spending money is all used up.
If your business is doing well because of the stimulus money, your business profits will go up for the next two years. Once the stimulus money runs out, your sales may drop and therefore your profitability will drop. It that is the case, when is the best time to sell your business? Before the market crashes in two years. If you believe it will take you 6 months to sell your business, you need to sell your business within the next 2 years which means have it on the market between now and the next 1.5 years. By the time it closes, there may still be excellent sales but they may be short lived and the drop in revenue will be to the benefit of the new owner.