Why You Couldn’t Sell Your Business Yourself

Many small business owners are self starters and have tolerance for risk as well as a natural optimism, so when they decide they are ready to transition out of the ownership role in the business they created, they try to sell them themselves. And they fail. Their businesses linger on the market, or they receive offers that are far below what they estimated, so they get discouraged. As economic creators they’re used to having success, so they wonder where it all went wrong.

What went wrong is that they do not have experience or knowledge in the small business market, nor do they have the necessary connections. They have a great deal of experience running a business, but no experience selling one, so they do not know what to expect.

Finally, they may be unaware of critical weaknesses in their businesses’ structures that make them less appealing on the market. They are not objective enough to see the trouble spots that, with some effort, could be addressed and rectified.

Did you know that 40% of businesses that are placed on the market will not sell? That should be a comforting thought to owners who have not succeeded on their own. Not all M&A professionals agree on how to sell a business and get the best price for it either. Choosing an effective M&A team can make a real difference in the sale experience and the final price you receive. What should you look for in an M&A professional?

A team of professionals who:

• Know the market conditions as they are now
• Will advertise your business to actual would-be buyers
• Can objectively assess a business in terms of how saleable it is currently
• Will provide advice and support during the entire process
• Can effectively broker a limited auction process

Since few business owners have the knowledge and experience of the above, it’s no wonder they run into problems when they try to sell their own businesses. It’s proven that an effective broker will make the process simpler, faster, and less frustrating, and will be able to advise you on what you can expect both from the process itself and in terms of offers from buyers. A good business broker will be able to assess your business and tell you straight out the difficulties you might have in selling it and what you can do to better position your business on the market. As Calder Capital’s Max Friar recently said in an interview with MiBiz:

“The number one thing you can do to increase the value, the marketability, and the deal terms – all three of those things will increase – is if you can take a couple steps out of your company and you can document what you do, … delegate your responsibilities to a manager or vice president, and … start documenting some of the processes in the business that are in people’s heads. If that owner is able to step away, buyers are very, very interested.”

Access to this kind of expertise means that, for many business owners who aren’t interested in selling yet but are transitioning towards a sale or retirement, now is a good time to better understand what needs to be done to better prepare for a future sale. Call us at Calder Capital if we can help you position your business to be a desirable property for the business market either today or in the future.

We have helped many other business owners do it, and we can do the same for you.