Share This Info:  

10 Obstacles To Selling A Business


Following are the most common obstacles that prevent a business from being sold:

Poor Accounting Records

Buyers need to be confident that what is represented about the business is true and they will seldom buy a business if the financial results cannot be documented.

Unrealistic Asking Price

Most businesses are valued at a multiple of their Seller’s Discretionary Earnings (“SDE”) which is EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization), plus all of the direct and indirect benefits that the business provides the seller such as salary, bonuses, auto expenses, health & life insurance, travel & entertainment, relatives on the payroll, toys, etc.  Each industry has its own SDE range of values.  Businesses rarely sell for more than what the numbers can support.

Seller Demanding All Cash

Financing is the biggest challenge in selling a business today.  Seller financing is often required for from 20% to 50% of the sale price.  Most buyers would prefer to purchase a $2M dollar business with 50% down vs. a $1M business for all cash, with the first business making considerably more money than the second one.  Also, a seller note gives the buyer some assurance that the seller has been truthful and is committed to the buyer’s success.

Low Or No Profits

There are few motivations for a buyer to make a big financial commitment for the opportunity to work 50+ hours a week and make low profits or a loss.  We have sold a number of underperforming businesses but such buyers are very difficult to find.  A business with flat to down numbers is a big concern to a buyer as they do not know where the bottom is and when, if ever, results will improve.

Lack Of Trust

Buyers will seldom buy and sellers will seldom sell unless there is mutual trust and respect.

Customer, Geographic, Product and/or Industry Concentration

Concentration increases the risk to a buyer.  Accordingly, the more concentration the more problematical it will be to find a buyer.

Competition

The big threats today for many businesses are:  China/India, virtual/home based businesses, franchises, and a formidable competitor in the area.

Landlords

Landlords kill many business sales by not approving the buyer/new tenant or demanding unrealistic lease terms.  So, keep a good relationship with your landlord.

Curb Appeal

As with selling a home, first impressions are very important.  A few thousand dollars spent on paint, cleaning or replacing carpet, fixing signage, de-junking, etc. can make a big difference in the number of offers we generate and the ultimate sales price of a business.

Limited To No Upside Potential

A business without growth potential is challenging to sell.  Help the broker identify and document sales and earnings growth opportunities.  Buyers will buy for potential but they will not pay much for it.

About The Author: You may contact D. Joe Atchison at 951-277-4002 for a no-obligation consultation regarding your business or a business that you are considering acquiring.  Joe is a licensed Business Broker, a Certified Business Intermediary (International Business Brokers Association), a Certified Business Broker (California Business Brokers Association) and is a Certified Public Accountant.


Categories: BizBen Blog Contributor, Deal And Escrow Issues, How To Sell A Business, Selling A Business



  Helpful Resources To Assist In Selling And Buying California Businesses
Diane Boudreau-Tschetter: Escrow And Bulk Sale Services

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses

Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.

Helen Yoo: Escrow & Bulk Sale Services - Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.

Mani Singh, Business Broker, Inland Empire

I have successfully represented clients sell & acquire multitude of businesses ranging from Gas Stations, Liquor Stores, Markets, Super Markets, Smoke Shops, Postal Stores, Restaurants, General Retail, Auto and Construction related. Phone me for assistance with selling or buying at 951-296-7646 Cell

Chris Seaman, Business Broker - San Diego County Area

Founded in 1994, First Choice Business Brokers has accelerated to become one of the most successful Business Sales Organizations in the world. Our team of agents have gone through extensive training to become experts in the field of business brokerage. Call Chris at 858-578-4111 for more info.

Brad Steinberg, Broker - Laundromat Specialists

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Steve Erlinger: Laundry Broker, Consultant - Southern California

I specialize in the laundry industry broker and consultant in Southern California. I assist buyers navigate the many facets of finding, evaluating, and operating a laundry business. I also help current laundry owners find additional stores, sell, evaluate an existing laundromat.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Mentoring In How To Buy A Business - Tips From Expert Willard Michlin, CPA

Willard Michlin, CPA a due diligence specialist shares his views on the mentoring process & about how buyers can "profit" from such a relationship when searching and buying a business. Mr. Michlin, CPA (800-864-0420) performs due-diligence services and and consulting services for business buyers.

Podcast/Vlog: Business Purchase Financing Chat: SBA Loan, Non SBA Financing

Ever wonder what is involved in obtaining business purchase financing to buy a business or franchise? Peter Siegel, MBA who has over 20 years advising and obtaining all types of financing for business buyers in this video/podcast - SBA loans, Non-SBA Financing, Alternative Financing Sources.

Due Diligence Checklist: 10 Key Items To Investigate When Buying Businesses

Buying a California small business involves reviewing due diligence checklists so buyers can learn enough to determine whether to proceed with a deal. Here's a due diligence checklist. Peter Siegel, MBA (BizBen ProBuy Advisor & Business Purchase Financing Expert) at 866-270-6278 shares his views.

Purchase A Business With Limited Or No Cash - Financing Tips For Buyers

Purchasing a business with no money down can be difficult, but not impossible. Financing a business purchase or down payment can often be accomplished with these strategies from Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor with BizBen) at 866-270-6278.

Business Purchase Financing Help - Expert Tips For Faster SBA Loan Approvals

Business purchase financing advisor Peter Siegel, MBA shares his views on SBA loan financing. He explains the nuances of the SBA loan process when considering business purchase financing or getting pre-qualified. Reach Peter Siegel, MBA direct at 866-270-6278 regarding SBA & Non SBA Loan Financing.

Broker Explains Allocation Of The Purchase Price When Selling A Business

There are a handful of key asset categories in allocating or breaking down the purchase price allocation of a California business sale. Allocation is required to complete the transaction. In this blog post Lee Petsas (Orange County Business Broker) at 714-363-0440 covers asset allocation classes.

What Are The Pros And Cons Of Selling A Business For Sale By Owner?

What are the Pros & Cons of selling a business yourself? Joe Ranieri (Orange County Business Broker at 714-292-5448) discusses all the angles of business owners taking the initiative and selling their own business. He covers: commissions, flexibility factors, control, exposure, and confidentiality.

Attorney Specialist Shares Escrow Instruction Tips When Buying A Business

Once you have successfully negotiated the Asset Purchase Agreement ("APA") for your acquisition it's natural to relax a little and let your guard down. Attorney Specialist Mark Chatow discusses what business buyers should look out for when opening escrow and getting escrow instruction in place.

See All News, Tips And Events


Escrow Services From Helen Yoo New Century Escrow
BizBen Podcasts Live
Willard Michlin Due Diligence Services
Southern California Legal Services For Buyers And Sellers
Facebook
Twitter
Linkedin
Google Plus You Tube
Vlogs and Podcasts


Auto Related
Business Services
Children Related
Communication Related
Computer, Internet Related
Construction Related
Entertainment Related
Financial Services
Health, Beauty Related
Home Improvement Related
Maintenance Related
Manufacturing Related
Media, Publishing Related
Pet Related
Photography/Video Related
Real Estate Services
Restaurant, Food Related
Retail Related
Service Related
Sports Related
Transportation Related
Travel Related
Wholesale Related

Auto Body Shops
Auto Repair Shops
Bakeries
Bars, Sports Bars
Cafe Restaurants
Car Washes
Cleaning Services
Clothing, Apparel Stores
Coffee Shops
Convenience Stores
Deli Restaurants
Discount, Dollar Stores
Dry Cleaners
eCommerce Websites
Fast Food Restaurants
Florists, Flower Shops
Full Service Restaurants
Gas Stations
Gift Shops
Gyms, Fitness Facilities
Home Health Agencies
Hotels/Motels
Ice Cream Shops
Juice, Smoothie Shops
Laundromats
Liquor Stores
Markets, Marts
Nightclubs
Pizza Restaurants
Postal, Shipping Stores
Preschools, Day Care
Print Shops
Salons, Beauty Shops
Sandwich Shops
Smog Test Only Shops
Smoke Shops
Spas, Med Spas
Sushi Restaurants
Tire Shops
Towing Services
Vending Routes
Wireless, Cellular Shops
Yogurt Shops

Alameda
Alpine
Amador
Butte
Calaveras
Colusa
Contra Costa
Del Norte
El Dorado
Fresno
Glenn
Humboldt
Imperial
Inyo
Kern
Kings
Lake
Lassen
Los Angeles
Madera
Marin
Mariposa
Mendocino
Merced
Modoc
Mono
Monterey
Napa
Nevada
Orange
Placer
Plumas
Riverside
Sacramento
San Benito
San Bernardino
San Diego
San Francisco
San Joaquin
San Luis Obis
San Mateo
Santa Barbara
Santa Clara
Santa Cruz
Shasta
Sierra
Siskiyou
Solano
Sonoma
Stanislaus
Sutter
Tehama
Trinity
Tulare
Tuolumne
Ventura
Yolo
Yuba

0 to $99,999
$100,000 to $249,999
$250,000 to $499,999
$500,000 to $999,999
$1 million to $2 million
over $2 million



BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2019, All Rights Reserved

               Vlogs and Podcasts  
Join Us On Social Media - Content Updated Daily
Sign Up Today - For Our FREE BizBen Weekly Email Newsletter
Includes The Best Info On Buying, Selling, Valuing, Financing California Businesses:
Articles, Blog Posts, Podcasts, Videos/Vlogs, Discussions, Q&A, Workshops, Webinars,
Resources. Watch For An Email Confirmation After Signing Up Above. Thank you.
Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 
Search BizBen.com

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Mentoring In How To Buy A Business - Tips From Expert Willard Michlin, C...
Read More News
Getting An SBA Loan To Buy A Small Business: Dispelling Some Major Myths...
Read More News