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Take 5: Why Your Business Isn’t Selling

Take 5: Why Your Business Isn’t Selling …From the pages of South Jersey Biz…

Exiting the business you spent years or decades building can be a dicey experience, fraught with emotions that sometimes cloud the bigger picture: fully capitalizing on all your hard work. We spoke with Orlando Rivera, a principal and top-producing broker with Tannenbaum Business Brokers in Cherry Hill, to find out some reasons why your business just isn’t selling.

1. Unrealistic Valuation Often, owners set a price without any real basis. This is usually driven by emotion. But, much like a realtor can help you find that sweet spot for selling your home, you need an experienced, unbiased perspective in order to find a price that makes sense in the marketplace.

2. Deal Fatigue Let’s face it: It’s hard to think about maintaining your business to the standard you’ve set while meeting prospective buyers who are going to insult it as they negotiate. When you’ve already given up on the business and just want to move on, your effort to sell will likely suffer. A broker can take the burden off the seller, create more demand for your business, and keep you focused right up until closing.

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3. Financing This issue comes up most often for businesses with lower cash flow. “Main Street” businesses, especially those with revenues below $1 million, can be very difficult to sell because banks don’t feel as secure as they might with a higher-revenue business. This is not unsolvable, and there are creative ways for buyers to finance the transaction.

4. Deal Structure Related to financing, you are often required to give seller-financing equal to 10 to 50 percent of the value of the business for sale. If you don’t trust or feel comfortable with the buyer for some reason, you will be reluctant to provide it. However, with traditional lenders still leery of financing small business transactions (as noted above), a buyer will need seller-financing to complete the purchase. Also, it’s helpful to show the buyer that you stand behind the business so long as it is run by a new owner with the energy, skill and passion to continue its growth.

5. Timing Don’t wait until the business is in trouble or threatened by competition to sell. Buyers are wary of such a move. Although it’s natural to think about selling when you no longer feel like putting in the work, marketing at the wrong time can put up great barriers to your ability to sell. For example, it can be extremely difficult to sell your convenience store when a competitor like Wawa breaks ground on a new superstore right across the street from you.

Published (and copyrighted) in South Jersey Biz, Volume 5, Issue 4 (April, 2015).
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Author: Editorial Staff--South Jersey Biz

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