Are you having trouble selling your business?

by 22nd of September, 2011

What if my business wont sell? If Im having trouble selling my business? Not only is it frustrating having your business for sale, its even more so when its been over 6 month and you still don't have a business buyer!

As small business owners, we tend to become attached to our businesses. We work long hours and invest a lot of time and emotion into running the business and making sure it "works". We tend to see the value of our business, because we know every facet of it and how it works. We want to feel we are going to make a profit by selling it, and not have wasted all our time and energy. For this reason, we sometimes have problems stepping back and seeing the business from a potential buyers perspective, because its OUR business (well until the business sells).

How to improve your business for sale appeal?

There are a number of solutions to improving your businesses appeal:

Price - This always seems the most important aspect in the business sale. Lets be honest, when we sell our well managed small business, we want to make some money, or at least see a 'valid' reason to sell. No one wants to loose money in a business sale. So the question is... have you valued your business reasonably? Check out our business valuation article for tips on obtaining a valuation.

Stock at Value (SAV) is causing problems - If your asking $120,000 for the business and your stock on hand is $90,000 that is a lot of 'additional' cash the potential buyer has to find to buy the business. We see this often with hardware and machinery type stores. They have a lot of stock and it has a high cost value. This deters a lot of potential buyers simply because they dont have the money, or don't want to purchase that much stock in-case it doesn't sell, or its not the direction they want the business to stay on. Sometimes you find the SAV pricing is not correct, for instance if a lawn mower was purchased at $700 in 2008, its value in 2011 would have depreciated and it may be worth say $500. Old stock should be cleared out in a sale and any stock that can be sent back to a vendor should be (without making the store look empty). The business would seem more appealing if it had a $160,000 WIWO price tag because you cleared old stock and are monitoring stock levels.

Sellers Memo - Do you have one? If not its time to start typing. The sellers memo is a 1-2 page document that outlines your business, reason for selling, price etc. View our 'business sellers memo' article. It allows the potential buyers a document to take home, read, discuss with family member etc, and return with more questions. Its your business for sale marketing plan. Photos go a long way in the sellers memo!

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Business For Sale Advertisement - No one is going to walk up to you and offer to buy your business without knowing much about it. Your advertising campaigns need to be effective, eye catching and delivering the necessary information. Here are some tips about advertising your business for sale online. A boring add with no photos, will generate little interest.

Sellers Characteristics - As the business owner you know the business better then anyone else. You should be confident when speaking with potential buyers, be chatty, don't appear as though your withholding information, and act genuinely interested in "why they want to buy the business", focusing on the potential buyer rather then your needs will go a long way. If your not comfortable, ask a friend to join you during discussions, and make sure the lawyers and accountants are involved if your going to release confidential information. Dont give away too much information about your business up front, but suggest "Id be happy to discuss more details about the business, but would like to get a confidentiality agreement signed first, if that is ok?"

Appearance of the business - If a potential buyer walks into a cafe and its empty, with stock boxes everywhere, floor not swept, windows dirty, loud music etc. It is not going to give a very good impression. Be sure to tidy up your store!! If you have some general maintenance that needs doing (e.g. light bulb changed, door handle fixed) be sure you fix them first, make your business look presentable. I coat of paint, can always make a difference for a $40 tin you could get $1,000's more on the sale. Make the business appealing! If you have achieved any local awards or been featured in a magazine/newspaper be sure they are hanging up in the store.

Its important to remember that selling a business takes time! The new owners need to be confident they can run the business and it is your business they want to buy and operate. Try not to push the seller into buying, be open and available to chat, but never put pressure, unless you have competing offers or feel they are 'stringing you along'.

Was this article helpful? Has your business for sale ever been 'stuck in the mudd' and not receiving many enquiries?