There are many reasons why business are put up for sale. Some of the more common reasons can actually have little relevance to the business’ performance. For example, many small business owners must sell due to health reasons or personal concerns, such as divorce or partnership issues. Whilst a business downturn or the threat of competitors may prompt owners to sell, economic drivers are not the sole issue. Business owners may want or need to sell, but it is not always that simple.
Some business owners are looking to sell or retire, but can not afford to do so due to a lack of foresight. The day-to-day responsibilities of owning and operating a business can take their toll, and owners looking to make a change would love to be free of that burden. This can cause them to “check out” mentally, having profound negative impacts on their business.
Often, these owners stop investing the capital necessary to continue the growth of their business, triggering other events, such as the loss of key staff and/or customers. Losing a top customer to a major competitor can further accelerate the downward spiral. Failure of a business to maintain its footing and competitive advantage can lead to more aggressive posturing by existing competitors, or even encourage a new competitor into the market. In time, the owner may be faced with the harsh reality of closing, or selling at suboptimal prices if they are to salvage any of the business’ value.
The best way for a business owner to safeguard against this situation is to sell when their business is doing well, as this helps to ensure an optimal sale price. Planning ahead can help owners mitigate the risk of unforeseen circumstances, as no one can predict what the future may bring. Working with a business broker, even years before one is interested in selling, is one of the single smartest moves any business owner can make.
If you’re looking to sell or buy a business, we’d love to help you on your journey. Telephone First Choice Business Brokers on 9899-1888 for a confidential discussion.