If your business has been on the market for some time or you're thinking about selling your business then this article is a must read. It is our experience that there are six principle reasons why a business won't sell -
1. Business is over priced
A business will not sell if it is overpriced. If you or your broker is not getting conversion it is probably because the market doesn't see benefit or value in purchasing your business. A qualified broker will advise of the possible range in which he/she believes the market will pay for business. Ultimately the market decides the price. Be objective if you want to sell then you should meet the market.
2. Lack of information
It is amazing how many vendors/sellers try and sell their business without supplying any information to potential buyers. Most buyers will not purchase a business if there is insufficient information to demonstrate that it is worthwhile buying.
The preparation of a good profile not only encourages a buyer to buy, but it also educates their accountant and financiers as to the attributes of your business. The best way to evaluate this is to ask yourself the question "what would I want to see if I was purchasing a business"?
The more structured information you can supply the better your chances.
3. Lack of exposure
Whether you choose to sell the business yourself or through a business broker chances are you will have to pay for advertising. If you cannot afford to do this, do you really have a business to sell?
You can't sell a secret. There are many forms of exposure which you should consider.
Newspaper advertising - is the fastest method of obtaining a response for selling your business. It is our suggestion that you allow at least six weeks for the newspapers, if the response is not producing results, change the ad or review our reasons as to why businesses don't sell.
Internet Marketing - is the cheapest form of marketing providing that you know what keywords buyers use to find businesses or you know about pay per click campaigns and you know how to use them.
We design and implement a full marketing package to suit your needs and business.
4. Lack of motivation
If you are not prepared to spend time with genuine buyers and tyre kickers then you should appoint a business broker to represent you through the process. Unfortunately not all buyers will buy your business, you should prepare yourself to dealing with people who may appear to be wasting your time.
We qualify potential buyers to minimise the time wasted but when a buyer asks for information you should have it ready immediately to avoid losing their interest. Only certain information should be made available through a profile and an inspection, the balance will form part of due diligence.
Ultimately if you are not motivated to invest in preparing your business for sale, or invest in exposing the business to the market or providing relevant information then your business probably won't sell.
5. The business has been misrepresented in some way
So many times we have seen sellers go to all the effort and expense of trying to sell their business only to have it all fall over during the due diligence period. Unfortunately they are so desperate to sell that they misrepresent their business to an extent that a buyer no longer trust what the seller says. Our advice to you is be honest and don't try and hide anything. If the business has problems fix them, if you can't or don't want to make sure the asking price reflects the true value.
6. There is no market for your business
Unfortunately this is a reality. There are on occasions times where there is no market for your business. For example the demands for businesses that make under $100,000 in profit are less desirable during periods where unemployment is low. When there is high unemployment businesses in this market are in high demand.
