Sellers: First Impressions Are Critical When Selling A Small Business
I chat with various business owners every day and hear of a variety of businesses in nearly every imaginable business sector. The businesses that give the best first impression are those that appear well organized, are relatively clean, and where the business owner has books and records readily available. This gives me an indication that the business is most likely well run and that the owner has given some thought and preparation to the idea of selling his/her business.
What is the first thing people do when they decide to sell their car? Many take the car and have it professionally detailed. Those that don’t have it professionally detailed at least either take it to the car wash for a wash and wax, or spend the time and energy to wash and wax it themselves. Will anyone pay top dollar for a car with layers of dirt and bird droppings crusted into the paint? Not likely.
What do people do when they are going to sell their house? Many times they will paint the house, do a bit of landscaping and clean things up so the house shows well. Will anyone pay top dollar for a house that is dirty and cluttered with foot high weeds in the lawn? Not likely.
When it comes to business, the psychology is pretty much the same. I have seen manufacturing shops so clean you could eat off the floor. And, I have seen shops so filthy I didn’t want to sit, lean against, or touch anything. Interestingly enough it seems to be the latter where the business owners insist their business should command top dollar.
A buyer is not going to pay top dollar for a business that appears dirty, cluttered, disorganized and has either no books and records or records that make little to no sense.
The bottom line is that as a business owner, investing a few thousand dollars to have a professional work with you in preparing your business for sale will in most cases give you tens of thousands of dollars or more in return.
Peter Siegel, MBA - Founder Of BizBen.com (over 25 years), I am the Lead Advisor for the ProSell, ProBuy, & ProIntermediary Programs. I advise/coach buyers, sellers, and brokers daily about buying & selling small to mid-sized businesses throughout the Nation. I can be reached direct at 925-785-3118.
Comments & Feedback From Pro Intermediaries & Pro Advisors On BizBen:
Posted By: Attorney For Buyers & Sellers
If you want your business sold, it is critical in presenting it in the best light. As an analogy to selling real estate, realtors often notice those properties that have the fresh paint, updated kitchen and bathrooms, etc. will sell or sell a lot quicker than those that aren't...And if they aren't in that state, buyers often want something that is a total fixer/needs updating at a bargain price so that they can put in their personal touch. If you see something in the middle, i.e. half done jobs like new doors, but still those old/dinged up but repainted mouldings and baseboards or nice new countertops with cabinets needing refacing, people are more hesitant to buy. Things like this may seem like a cheap fix for the handyman/visionary type of person, but to the average buyer (especially in California), they may see shortcuts and dollars signs. Those little things you thought could save you money and be unnoticed will likely add up and become a big thing to others. Buyers may start to wonder if this is a pattern throughout the business, thus a red flag. If you aren't the handyman type of person, it is wise to hire a professional.
On the contrary, if the business lacks many of the attributes listed in this article, you can take this to your advantage. If a business has not been sold/stale and you see concerns, be comforted that likely does your competition. This may be your "fixer" at a good price. However, it is important to do your due diligence, especially when it comes to location, valuation and financials.
When talking with fast food restaurant sellers, I remind them that the buyer wants to see a business that is bright and clean. A business can have signage in the window, but not too much, because customers should be able to see inside, and this is especially important for liquor stores, because a store where people can not see inside, can be unsafe to who ever is working behind the register (i.e. robberies).
Place A Posting To Sell Or Buy A Business, Search All Postings
Who really represents the buyer? The selling broker or agent through dual agency? Many brokers and agents weigh in on this Discussion on BizBen. Bottomline is all business buyers need to know who really represents them and has their best interest at heart when seeking and negotiating on deals.
When selling a small business you always run the risk of a lawsuit. They aren't as common as one may think in this litigious world in which we live in, but whenever there is money exchanging hands & attorneys involved the stage is set for a lawsuit. Various ProIntermediaries share their viewpoints.
An often overlooked aspect of selling (or buying) a small business is taking back-up offers during the entire process of selling (or buying) a business. Most sellers (or buyers) don't realize that over fifty percent of all deals/contracts fall out escrow or contract for one reason or another.
Asking the seller straightforward questions and getting straightforward answers in return is an important part of the buying and due diligence process. In this Discussion, both ProIntermediaries and Advisors offer thorough questions you should be asking during your meeting with a business seller.
One of the most difficult challenges when purchasing a small business is expressed by this prospective buyer of a liquor store who is told by the seller that there is more money being made than shows up on the books. Should the buyer accept that statement by the seller & go ahead with the purchase?
One of the most popular business searches (and eventual business purchase) on BizBen is the self serve and full service car wash. Peter Siegel, MBA (ProBuy & ProSell Programs Director) with BizBen.com reflects on three types of car wash models and what buyers should look for in a car wash purchase.
The unfortunate truth is that approximately 50% of all small business sales transactions fall through. While failed transactions can happen for a variety of reasons, Peter Siegel, MBA (BizBen Founder & Lead Advisor) discusses the most common reason deals fall through; unrealistic asking prices.
Before purchasing a car wash (quick serve or full serve) you must understand that the industry as a whole will provide you with plenty of competition. More importantly, depending on what your interests are, you will identify what type of car wash you want. We discuss this all in this Discussion.
Determining the right time to sell a private business is as much an art as a science, because there are so many factors at play and each business is unique. The timing of a business sale is critical. Christina Lazuric, CBI, Orange County Business Broker discusses this topic on this BizBen Blog post.
Buyers interested in buying a janitorial cleaning business will find companies in this industry for sale that are quite profitable. Careful due diligence, including the six factors covered in this blog post, is advised before completing a deal. Peter Siegel, MBA with BizBen explores this industry.