What can I do if I cannot sell my business?
What can you do if you cannot sell your business? The current recession in 2008 and 2009 is marked by how low the economy has gone, the increase in unemployment but most frustrating of all, how long it has taken before the “green shoots” appear. If your business is struggling and you think your only option is to close the door and hand the keys back to the landlord, here are some things to consider.
If the business has excess fixtures, furniture and equipment, turn those items into cash by selling them. There are plenty of options to selling the goods including eBay and Craigslist. Make sure what is being sold is as presentable as possible but again, get some cash into the business and move unwanted items. This could include vehicles and real estate and other excess items. Hopefully the business has a current list of fixtures, furniture and equipment. If a list doesn’t exist, there is your starting point as you may be surprised what you have stored away.
After the above has been played out as much as possible and the motivation is still not strong enough to keep the business open, it may be worthwhile considering selling the business with the assets that are in place and needed to run the business. For example, if the business is a restaurant or has a lot of assets built in such as a manufacturing plant, there may be value in selling the business on an “as is” basis to a buyer who will take what you have, bring some fresh capital and enthusiasm and move forward with what you have. If your business owes money to a landlord, this may also be a method to “pay” the landlord and get out of your lease.
If this is an option that makes sense to you, your best way of handling this situation is by getting a third party valuation on the machinery and equipment. A third party appraiser who is properly trained and certified can you give a written report showing the total value of the assets. You can then use this report to negotiate with other parties and settle some or all liabilities. The appraisal method used may be Fair Market Value but it could also be Fair Market Value In Continued Use. Fair Market Value In Continued Use recognizes that the equipment may have shipping costs to get to the business, may have expert labor to install and get the equipment operational, and to remove and transport the item would incur costs thereby affecting its value.
As the saying goes – beauty is in the eye of the beholder. Where assets of a business are concerned, such as inventory, machinery and equipment, prices fluctuate based on supply and demand. If the supply and demand gets too far out of balance then prices move accordingly. That is, if the supply increases it means that prices decrease and vice versa. This is influenced by one final component and that is time. If the seller wants to move quickly then the price will go down. If the seller is in no hurry to sell and the buyer wants to move quickly, the price will go up.
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