5 Reasons Businesses Don’t Sell
Selling a business is not easy. There are many things that can prevent a buyer from looking at your business. You’ll need to market it, and market it well. Here are 5 common mistakes and how to avoid them.
1. It is unclear exactly what is being sold.
What goes with your business when you are selling it? Are you selling just your name and phone number, or are you including all of your equipment and assets? A buyer will want to know all of these things. Make a list of all the fixtures, furniture, and equipment that go with the business.
If any items are not being sold make sure this is stated clearly at the first meeting and why not. Preferably remove the items completely from the business. If vehicles are included, make sure they are roadworthy and have smog clearances. Know their value.
To do: Clarity is important. Make your sales intentions clear.
2. Failure to explain to the buyer the real value in the business opportunity.
Buying a business is a big decision at the best of times and it’s critical to be clear about the business being sold, its financial performance, its history, the types of customers that buy from the business, the number of employees and their role and so much more. If the sale includes real estate, check the real estate title to make sure it the scope of the property and its value are clear.
- Do any of the buildings need repair?
- Are the fixtures in good shape and operational?
- Would painting the business or cleaning things up improve the presentation?
Know what your business is worth, but be sure you can prove it to the buyer, or you may not get the offers you are looking for.
3. Failure to follow through with an interested buyer and keep the process moving forward.
Time kills all transactions. Make sure everything is in order and readily available so the process keeps moving forward. This is why hiring a business broker early in the process is key. They will be sure your business is ready to sell before it goes on the market and that the process of due diligence keeps things moving forward.
If you have a buyer on the hook, and they are interested in your business, it is critical that you keep them interested until the sale is complete.
4. Telling the buyer they are incompetent or don’t know what they are doing.
This should be common sense, but unfortunately, it is not. Sellers often are still too attached to their business and their “baby” and don’t really want to let it go, or they feel like the buyer who is interested will not know how to run their business.
Nothing will kill a deal faster than making accusations against the buyer or just being plain rude. Besides, it can even cost you business and current customers, especially if that person is in the same or a similar industry. Be careful, and treat your buyer like a customer. Because they are one.
5. Selling when you shouldn’t.
Some sellers try to sell a business when they run out of energy, are distracted by personal problems such as a divorce or medical problems, the business is not performing at its best due to the economy, or there has been a shift in the economy that reduces the demand for that service.
There are many other reasons but to increase the chances of selling, make sure there is a compelling reason to expect a buyer to buy the business. If things are not going well for you, why would that change under a new owner? If you cannot sell at the moment, there are other exit strategies that may make more sense.
For more immediate help you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.