What Drives Business Owners to Sell... And Business Buyers to Buy

The buyer of your business will buy for his or her reasons, not yours.  If you decide to sell because your business is not going well and you simply want to get rid of it... do you think a buyer will be convinced?  Your attitude and what you say can drastically devalue your business and its true worth.
 
Whatever your situation, your reason for selling must be convincing and your explanations consistent.
 
It's only natural that you will want to get the highest price you possibly can.  Although how much you get is important, it won't necessarily drive your ultimate decision to sell.
 
For most business owners, the decision to sell is usually a combination of personal and financial reasons.  Is this your situation too?  The chances are you will have a personal attachment to your business.   It’s been part of your life for some time now.  Only you are capable of making the ultimate decision to sell.
 
The same applies to buyers.   It won't just be a financial decision, it will also be about lifestyle, personal independence, freedom to express themselves, maybe an escape from the corporate "rat race", or the satisfaction of being in charge of their own little empire.
 
The price they pay is important, as it will need to stack-up financially, if they are to convince someone to lend them money.  However, financial considerations alone will not drive their decision to purchase.
 
Buying the business will change their lives and they know it.  Only the buyer is capable of making the decision to buy.
 
Remember at the end of the day, both you and your potential buyer will have to balance the imagined personal gains against what could be uncertain financial prospects.  Here's the crunch... because you as a seller are offering a business opportunity and NOT a business guarantee.


Article by Noel Pebbles "Sell Your Business the Easy Way"

Common Reasons That Owners Have to Sell Their Business

Selling a business is never an easy decision. There could be various reasons for an owner to sell his/her company, however, the decision needs careful consideration as sometimes a hasty decision to sell can lead to feelings of regret, guilt, and loss later. The owner needs to assess the situation and determine whether they are ready to sell their business and prepare themselves emotionally and mentally for it. 

Assessing the reason for selling your business is a major step towards making the decision to sell it. Some of the most common reasons for owners selling their company are:

Debt:  When the outgoing becomes more than the incoming, it is a red flag. A lot of owners end up losing their savings, their assets, and even their houses just because they keep investing and covering themselves with more and more debt to revive their business. A careful consideration of the option to sell the business to recover cost when the debt starts to grow uncomfortable is a good idea.

Business ceases to be profitable: This could be because either the product loses market appeal or the mode of marketing becomes redundant. This is in fact, a good reason to sell if it is not possible to better it in any way.

Passing it on to heirs: This is one of the most preferred ways since the business still stays in the family. Sometimes the owner can’t take the business to the next level, compete with the market, or perhaps they just want the new generation to begin managing the business.

New Business venture: A lot of small business owners start a particular business in order to generate enough income to start their ‘dream’ business.

Boredom: Owners often lose the excitement of owning a business and this happens when the stress of the business becomes unmanageable for them. It is important that the owner is completely sure that they do not want to manage it anymore, not just because of a one-time event.

Retirement: Many people plan their business in a manner to retire by a certain age, and when they reach their milestone, they sell to move on and enjoy their lives just as they had planned.

Why Use a Business Broker In a Business Sale?

Any business owner who has sold a business on his or her own will tell you it’s a long, tedious and stressful process.  It consumes time and distracts you from the day-to-day operation of the business.  While your focus should be on maintaining or increasing the value of your business, all of your time and energy is directed to the sale process. 

That’s where an experienced, qualified business broker can pay huge dividends.  A professional business broker can help guide you through the complicated process of selling your business.  There are many areas where the business broker expertise pays off:

• Confidentiality. A business broker protects the identity of the company and only exchange information to buyers approved by the seller after signing a Confidentiality Agreement. This agreement binds the prospective buyer from disclosing any information on the operations of the business.
• Business Continuity. Selling a business is time-consuming for an owner who already is probably wearing many hats for the company.  By taking on the additional load of selling the business, essential functions will get less attention and possibly damage the business. The owner can maintain a focus on running the business when a broker is working on the sale. 
• Reaching potential buyers.  Business brokers have the tools and resources to reach the largest possible base of buyers. They screen these potential buyers to find the most qualified buyer that is well suited to the business and will be able to run it successfully.
• Marketing. A business broker can help present your company in the best light to maximize the sale price.  He or she has an understanding of the key values that buyers are looking for and can assist in identifying changes that can lead to a better selling price. 
• Valuing your Business. Putting a value on a business is far more difficult and complex than valuing a house.  Every business is different, with hundreds of variables that have an impact on the value. Business brokers have access to business transaction databases that can be used as guidelines or reference points. But the best way for a business owner to truly feel comfortable that he got the best deal is to have several financially viable parties bidding for his business, which is much more likely using the resources of a professional business broker.
• Balance of Experience. Most corporate buyers have acquired multiple businesses while sellers usually have only one sale.  An experienced business broker can level the playing field for a business owner by making his one and only business sale. 
• Closing a Deal.  Since the business broker’s sole function is to sell the business, there’s a much better chance that a deal will be closed in less time.  The faster the sale, the lower the risk of employee problems, customer defection and predatory competition.

Utilizing the services of an experienced, professional business broker allows the owner to focus on running the business reducing the risk of business erosion during the sale process.  A sale facilitated by a business broker helps maximize sales proceeds by involving a large universe of buyers in a confidential, competitive bidding process.

Keeping the Sale of Your Business Confidential

Keeping the sale of a business confidential is most commonly the number one concern for business owners. Employees may become worried about the security of their employment, and clients may become concerned about quality and service.  

Business brokers specialize in confidentiality. Every business they sell is a confidential transaction. A broker acts on your behalf allowing you to remain anonymous. It’s important to maintain confidentiality.

When should you tell your employees about the sale? 

 Our considerable experience has proven that it is best to tell your employees about the sale after the sale is complete. Of course, if there is an employee whose expertise will be needed after the sale, you should introduce the buyer to this employee shortly before closing.

We have found that once employees find out that the business is for sale, they often just assume that their position will be replaced with the new owner’s personnel. However, this is far from the truth. Current employees are a wealth of knowledge. After the transaction has occurred and the seller is no longer there, employees become a real asset to the business. It usually is best if employees are introduced to the new owner right after closing the sale. This enables the new owner to tell about his background and to take time to assure the employees of their value and that no one is going anywhere– all without distressing anyone.

If you have a business you would like to sell, please contact our office at 250-751-7917 or toll-free 1-877-289-0969.  We will be happy to discuss how we can meet your goals as a seller while maintaining confidentiality.