Why a business doesn’t sell

Posted on October 22, 2018

Not every business listed for sale will be successful in finding a buyer. Some trade groups have stated that less than 10% of businesses that are listed “For Sale by Owner” will sell. These same groups claim that businesses listed with Business Brokers will have a 50% probability of selling which is 5 times the rate of success. I have identified 9 reasons businesses fail to sell. A seller can raise their probability percentage of selling their business by addressing these items.

Here are the top 9 reasons businesses don’t sell;

1.      Unrealistic expectations – Owners do not know what the realistic value is of their business and what they can expect a buyer to pay for it.

2.      Inadequate financial reporting – Inaccurate or incomplete books and records are kept. Buyers are willing to pay based on the numbers that they can verify.

3.      Lack of consistent revenue stream – Sales and profits are on a downward trend.

4.      Business atmosphere – The business market is changing, and the owners have not reacted to the changes.

5.      Customer concentration – A large percentage of the business is derived from a single customer.

6.      Owner dependency – The owner is the business.

7.      Credibility – It is perceived that the sellers are not honest about the business or its success.

8.      Partners – There may be partners that have different goals.

9.      Taxes – The seller is unaware about the tax implications of selling a business.

Buying or selling a business is a very involved process. If you are considering buying or selling a business, I would suggest a meeting with a Business Broker. I welcome you to contact Central Florida Business Brokerage at [email protected] or call us at (407)261-9001.

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