Readers of my blog and articles on BizBen have seen my advice for busines owner/sellers about putting your business on the market, lining up a suitable buyer, negotiating a win-win deal, and then completing escrow with minimum problems.
Recognizing that 70% of small California businesses offered to buyers are never sold, and that some of the obvious reasons: over-pricing, inadequate records, insufficient lease--have been discussed in detail, it might be useful to point out lesser- known problems, often resulting from errors made unknowingly when attempting to sell a California small to mid-sized business.
The Common Six Owner/Seller Mistakes Are:
1. Don't assume you always can tell whether a prospect might be a buyer. Okay, you usually will be right in your opinion, when someone is looking at your business, about whether the person is "for real." But you can be wrong sometimes, and that mistake can result in neglecting to work with someone who may have been the perfect buyer. Every experienced business broker can tell you stories about losing sales by guessing wrong about who is, and who is not a likely buyer.
2. Don't make the business look too "sanitized." Seems like a strange idea, because you would think the cleaner the premises, the more appealing the business. Certainly a company that shows poorly because it looks to be in disarray will turn off prospective buyers. But so will the appearance that the owner is spending more time with housekeeping chores than with conducting business. Buyers become suspicious when a tire shop looks like it is ready for use by a heart surgeon.
3. Don't neglect to engage with your prospects. Some sellers communicate a cynical attitude, probably because they have wasted time with people who aren't qualified or interested in buying the business. But buyers usually are uncomfortable around someone who doesn't make them feel welcome. A powerful strategy of most successful sales people is to establish rapport with customers. Whether or not they are conscious of it, people want to buy from someone they like. By making an effort to be friendly, you increase the chances that prospects will want to do business with you.
4. Too friendly, though, is also a mistake. The prospect may say "yes" to your lunch invitation, but that won't make him more likely to buy your business. And it may provoke suspicious thoughts that you are being too accommodating. The level of warmth you show toward buyer prospects, the "chemistry" you establish, is an expression of your personality. You don't have to be a phony, just be careful not to get too cold and distant or too "warm and fuzzy."
5. Don't forget to become informed about the marketplace and how it will impact the appeal of your offering. Do you have some rationalization for the price? Have you investigated financing options to help a motivated buyer get the money needed to complete the purchase?
6. Don't put off necessary preparation until you have an interested buyer. By then it's too late to start collecting financial information, compiling an assets list, and negotiating with the landlord for a new lease. While you're finding out that getting prepared takes longer than you'd thought, your "buyer" will be negotiating to buy another business opportunity, one that is all ready to be investigated and purchased.
By avoiding these seller errors you'll increase your chances of joining the 30% of California small business owners who achieve a satisfactory sale of their business.
If you have additional feedback and ideas regarding seller mistakes please feel free to comment below this blog post/article - let's keep this discussion/topic alive with comments and replies - I look forward to hearing about your experiences, and issues that could prohibit the sale of a business.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Elizabeth McGovern: Escrow Services - San Francisco Bay Area
McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.
|Shalonda Chappel: Escrow & Bulk Sale Services - Southern California
Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.
|Helen Yoo, New Century Escrow - Escrow Services In 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.
|William F. Ziprick, Attorney: Legal Services For Buyers And Sellers
Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.
|Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA
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.
|Brad Steinberg, Business Broker: Laundromat Specialist
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.
|Ralph Santos, Business Broker Specialist: Home Health, Hospice, Health Care
Using my MBA and my perseverance I will make things happen! I provide business brokerage niche services specializing in the hospice and home health care agency industry in the Los Angeles County or Ventura County areas. For either buying or selling assistance please phone or email me today.
|Joe Ranieri, Business Broker: Orange, LA County Areas
Having owned retail/restaurant businesses for over 20 years, my interest turned to selling businesses rather than owning them. I specialize in LA & Orange County restaurants, fast food independents and chains, bars, & liquor stores. Call 714-292-5448 Cell/Text.
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