Can I Sell a Distressed Business
Can I sell a distressed business? Without exception, every business owner wants their business to be successful. The reason is obvious. A successful business means the owner makes money and is able to sell the business for a return on their time and investment. However, what are the options and what steps do you take if the business is not successful?
There is no question the economy is improving. Look at the simple stats of the rate of increase in the GDP and that the unemployment rate is gradually declining. The pace of economic growth, however, is uneven in different parts of the country and makes it hard for business owners or would-be business owners to know where they need to be.
Many business owners have hung on during the Great Recession with the hopes they could sell their business for a ‘reasonable’ price. There are many that have now hung on as long as they can and are now deciding it is time to sell regardless of the price they get as they have simply ‘had enough.’
Sell a distressed business
If you own a business and your desire to sell the business is because you have simply ‘had enough’, here are some suggestions for you.
The first and most important step to take is to deal with reality. This can be the hardest part for the business owner to do as the owner at some level feels like a failure. The economy over the last four years or so, however, has been particularly brutal on small business owners. The reasons are many and include the fact that the small business owner does not have the financial resources of a large corporation and they are unable to ride out a change in the economy. By definition, a small business is generally helping customers and attracting business in a small local market or economy. If the local market declines their business is hurt whereas a large corporation can move or has a business in other markets that can be doing well and provide support to the corporation while it waits for other economies to heal and get stronger. California, Nevada, Arizona, and Florida have been particularly hard hit by the drop in the value of houses. This drop in values flows to hurting small businesses more so than in stronger markets like Texas or economies around the world.
The main reason I have seen small businesses suffer more during this recession is that small businesses tend to have a higher ratio of debt than larger businesses. If the debt burden becomes too great it can quickly eat up the working capital of the business and push it into bankruptcy. Just this week I received a call from a friend who started a new business 4 months ago. He had obtained an SBA loan for about $650,000 and borrowed from family and friends another $350,000. His call to me was to ask the steps to sell his business after only being open 4 months as his working capital was running out and he would be unable to continue to operate the business.
Owning and operating a business teaches many skills, provides constant learning, the opportunity to meet many people from different walks of life that you do not get from being an employee, tax deductions employees do not get any more. However, if you are having constant sleepless nights or damage to your health or relationships the price is too high.
Step away from the strain and stress of owning and operating your business and see what new opportunities are available to you. If you plan to sell your business, do the research to understand what steps to take and move forward. Life is too short to not live it on your terms.
Andrew Rogerson specializes in helping business owners sell a business. Services include business valuations, marketing the business, negotiating the transaction as well as third-party finance with SBA loans, due diligence, and escrow. He is the author of four books on business ownership called Successfully Start Your Business, Successfully Buy Your Business, Successfully Buy Your Franchise and Successfully Sell Your Business. For more information visit https://www.rogersonbusinessservices.com/services/selling-a-business.
Would you like to know the value of your business? If you would like to know the value of your business or would simply like more information, this link will allow you to get a free sample of a Brokers Opinion of Value – Sample business valuation