There are at least 69 reasons why only about 1 of every 5 businesses listed for sale actually SELL
You should be aware of the following 69 obstacles that might be encountered and should be overcome or disclosed if you want to successfully SELL YOUR BUSINESS!
- Business Owner’s Failure to Plan for a Sale ( Fail to plan = plan to fail )
- No True Analysis of Actual Business Saleability
- Owners With Unrealistic Price Expectations
- No Professional Appraisal or Valuation
- Choosing The Wrong Intermediary
- Intentional Misrepresentation by Seller
- Sellers Unwilling to Use Professional Advisors
- Excessive Personal Expenses and Skimming Cash
- Inadequate Recordkeeping / Accounting Systems / Financial Reports
- Low or Inconsistent Gross Margins
- Inadequate Future Maintainable Earnings (FME)
- Owners Who are not Committed to a Sale
- Burned-Out Owners Ruin Business Value
- Owners Who Try to Sell the Business Themselves
- Inadequate Marketing and Sales Efforts
- Debtors- out of control or many bad debts – reflect on you and business
- Creditors –Poor relationship and poor payment of invoices
- Undisclosed Liabilities and Debts
- Unresolved Legal Issues
- Bad Timing – Waiting too Long to Sell
- Not Involving Professional Advisors Soon Enough
- Sellers’ Lack of Emotional Control
- Sellers without a Business Plan
- Asset Value too High vs. Return on Investment
- No Manuals / Processes or Systems In Place
- Losing Focus – Business Decline during Sale Process
- Sellers’ Impatience with Sale Process
- Sellers Don’t Understand Buyers’ Motivations
- Trust Issues from Inadequate Disclosures from owner
- Large Working Capital Requirements
- Poor Location, Lease too Short or No Lease at all
- Difficulties in Transferring the Lease of Premises
- Current Premises Over Priced – too much rent, Not Market Value
- Inadequate Preparation for Due Diligence
- Web site, Social media Inadequate
- No Detailed Plant and Equipment list
- No Detailed Stock / Inventory List – over valued (must be cost price)
- Employee/ Labour Problems
- Technological Obsolescence
- Owners Don’t Sell Business’ Growth Potential
- Lack of Compliance with Regulatory Authorities (Franchisors, Licensors, etc.)
- Lack of Barriers to Entry – very easy to start similar business
- Changes in Competitive Threats or Business Environment (market share)
- Sellers’ Unwillingness to Stay for a Transition Period and offer adequate training
- Lack of Compliance with Regulations (Environmental, Health/Safety, Taxes, etc.)
- Lack of Flexibility in Negotiations
- Owners Forced to Sell Due to Factors Beyond their Control
- Failures in Negotiating Representation and Warranties
- Inflexibility in Structuring a Deal
- Owners Unwilling to Provide Partial Financing or leave something in
- Environmental Risks from business
- Failure to Facilitate Closing on a Timely Basis
- Failures in Negotiating Deed of Restraint Agreement
- All buyers will evaluate your business on fact, not hearsay or fiction
- Price – Critical step in the Sale process –Not many buyers look at unreal business prices
- You must satisfy the financier or money person ( Bank, Partner , Family, Friends etc)
- Selling what you sell usually takes years of sales training, product knowledge, conferences and experience, you will also require that level of expertise to sell your business
- If you currently have a successful business, you could probably learn how to sell your business if you have 4 – 5 years to do so.
- Marketing strategy for each business is different
- Qualifying the buyer is very important, suitability, experience, finance people skills, staff management
- Most Business Value is directly related to profitability and risk to obtain that profit
- Business dependency on the owner must be reduced or eliminated as you do not usually go with the business – that is why you are selling it
- Presentation or Perception is everything
- Leave the emotion aside and concentrate on the profit – that’s what a buyer wants to see
- Having your business appraised buy a certified business valuer using the same principals used to do an unbiased valuation is critical – No vested Interests
- Totally a buyers’ market – baby boomers are all trying to sell / get-out
- Have you overcome RISK – future sales / longevity, customer risk, staff risk, economic risk, technical risk, systems risk, supply risk, economic risk, market risk, tenure risk, owner risk
- If your business is not making a fair and reasonable wage, it probably cannot be sold!
- You are constantly being judged and under scrutiny from buyer – buyers due diligence!
Note: This information is given as a guide only to possible obstacles any business may face in its intended sale process.