Six Secrets For Sellers Of Small Business — Errors To Avoid
Many sellers of small businesses think they have all the right answers when it comes time to find a buyer and get a deal at the price and terms they want. Discussions with business brokers, however, reveal that even business owners who are good at selling their company’s products and services, and know about the obvious things to do in order to market their companies, can make some deal-killing errors when trying to get a buyer to say “yes.”
Here are six key things to avoid if you want to sell your business.
- DON’T prejudge the prospects and assume you know who is, and who is not a good buyer. In most cases your instincts are reliable when you evaluate people who inquire about your business for sale. Most of the time you can tell who wouldn’t be a good candidate to own the company. The problem is that you aren’t always right. And by prejudging every person who investigates the business you run the risk of dismissing and losing someone who could have become the new owner. Ask a business broker about this, because anyone with experience in the industry can relate a tale about losing a sale by neglecting a “real” buyer.”
- DON’T think your repair shop has to look like an operating room where heart transplants are performed. While it is important that the place of business for sale is presentable, as many brokers suggest, there is such a thing as looking “too good.” Buyers are turned off not only by businesses that look like disaster areas, but also by for-sale offerings that have been scrubbed down and “dressed up.” The company has to appear to be a place where business is conducted. Neat and organized is a better look for a business for sale than “immaculate”
- DON’T be too aloof toward prospective buyers. Not unusual at all to get a bit cautious, maybe even distrustful, when a person who says he/she is interested in your business starts asking questions. Any successful sales person will tell you to put on that smile, however, because the chances of success are greatly improved when you establish a good relationship with the customer. It’s important to try and act friendly toward every prospect. The rapport you establish not only will encourage the buyer to do business with you, it will set a good tone for relations after you reach an agreement and work together during the post-sale period when you provide training and consulting.
- But that doesn’t mean sell hard. A seller with an over-bearing attitude and high-pressure style has ruined as many potential small business sales as a financial report showing unsatisfactory revenue and profit performance. If you’re using a business broker, it’s his or her job to “close” for a commitment. Pushing someone for a “decision,” or even an answer to “well, are you interested?” is not likely to elicit a truthful response, and could well chase away the prospect.
- DON’T forget to do your homework. That means finding out what the prevailing price formula is for your type of business and geographic location. Learn about the best places to advertise the company for sale and take advantage of other opportunities to become informed about what you want to do, talking with knowledgeable professionals and participating in educational events such as the free BizBen webinar, Selling a Business.
- DON’T wait until there is a good buyer candidate before you get your act together. When there’s an interested and qualified buyer asking for more information, it’s too late to start talking to the landlord about a new lease, assembling a set of books and records for inspection, and compiling the list of assets to be included in the deal. While you’re doing that, and finding out that the process takes more time than you’d expected, your “buyer” is examining–and perhaps getting interested in–other for-sale offerings.
Business consultants and intermediaries are full of advice about what a business owner should do when he or she wants to sell out. What to do, for example, includes having a good lease, being prepared to substantiate your statements about performance, and setting the correct asking price. The important “don’ts” covering less obvious factors need to be followed as well if you want to convert a prospect to a buyer.
About the Author: Nationally known blogger/author Peter Siegel, MBA, consults buyers and sellers of small businesses in California. He launched BizBen.com in 1993, and adds 200 offerings daily to the site’s 7000+ featured businesses for sale. Buyers, sellers, business brokers and other professionals visit http://www.bizben.com/ for its opportunities, ideas, tips, daily blogs, educational events and other resources.