How to Overcome Challenges in Selling a Business

You’ve worked hard to build and grow a successful business, and you deserve to walk away knowing you’ve done your due diligence to secure a fair, profitable sale. But selling a business doesn’t happen overnight — it takes thorough preparation and a smart strategy to find the right buyer and keep the process confidential.

Is It Hard to Sell a Business?

If you’re trying to do it alone, yes. There are many barriers to selling a business, and overcoming them takes extensive time and research. This is especially true in times of market instability. Selling a business involves more than finding a buyer — you have to balance that part of the process with developing a transition plan for yourself, your stakeholders and your employees while still tending to day-to-day operations.

It is even more difficult if your business:

• Isn’t prepared to sell: Trying to sell before you have all the documents, statements and legalities in place complicates the process and may turn potential buyers away. It’s important to have a clear exit strategy in motion long before trying to list.
• Operates in a niche market: Highly specialized businesses or ones that rely on special licenses or proprietary technology to operate require a more targeted strategy because the pool of buyers is smaller. Transferring ownership is also more complex, which may deter possible buyers from taking action.
• Has declining or inconsistent revenue: Buyers are hesitant to pursue businesses with an inconsistent profit model or one that has seen a steady decline in revenue in recent years.
• Has an inaccurate or incomplete profile: Buyers need to know what they’re getting into, and one of the best ways to scare off leads is by not offering a complete or accurate picture of your business’s financial statements.

5 Common Obstacles in Selling a Business

Once you’ve reached the point of seeking a buyer, there are some common pitfalls to know.

1. Ineffective Marketing of Your Business for Sale

Marketing a for-sale business is very different from selling a house. While homeowners have access to various real estate sites, finding a buyer for a privately owned business requires a very specific, focused approach. It takes a delicate balance to implement a strong outreach strategy while keeping the sale private and confidential. 

Working with a broker simplifies the process. They have direct access to buyers and can reach high-value prospects through avenues you don’t have access to, such as direct communication through an internal email list of interested parties or one-on-one outreach. This insider approach keeps knowledge of the sale limited to the most likely leads and saves countless hours you would have otherwise spent waiting for buyers to find you.

2. Not Listing Your Business for the Right Price

Listing your business for sale at too high a price can keep prospective buyers from ever reaching out, especially in a competitive marketplace. Listing too low could send the wrong message and ultimately keep you from making the profit you deserve after the hard work of launching and running a successful business. There are several methods you might employ to value your business before listing, including the:

• Income approach, which focuses on the business’s anticipated income potential.
• Asset approach, which calculates the business’s overall value based on just its assets.
• Market approach, which takes into account the value of similar businesses within your market and industry.

You also have to consider the structure of the sale, including who gets to set the terms and what elements are negotiable. If you focus too much on your selling price and ignore the sale terms, you risk never seeing the full amount you sell for.

3. Deciding Whether to Offer Financing

Offering financing may help you attract buyers and sell faster, but you run the risk of payments defaulting. Even if you take every precaution and deem the buyer creditworthy, you will have to remain involved with the business to some extent until the price is paid in full. If you’re selling with the goal of retirement, the last thing you want is unpredictability keeping you tied down. 

4. Overlooking or Mishandling Potential Competitor Interest

Don’t overlook the potential benefits of selling your business to a competitor, especially if you operate in a niche or highly specialized market with a smaller pool of prospects. That said, should you decide to gauge your competitor’s interest, be very cautious and well-prepared. Some competitors may feign interest in an attempt to learn trade secrets or gain access to your list of clientele. Always require a nondisclosure agreement before moving forward with negotiations or a sale.

If you approach your competitor instead of the other way around, you also risk playing your hand too soon. If they know you’re eager to sell, they can use that to negotiate a lower price or more favorable terms. 

Working with a third-party business broker is the most secure way to facilitate a sale — or even a conversation — with competing businesses.

5. Trying to Do It Alone

When you consider all the obstacles involved in selling a business and factor in the time and effort it takes to prepare, it’s easy to see why so many business owners get stuck in a cycle of “maybe next year.” The whole process can take years without proper planning, and you’re stuck in a state of limbo while you wait to find a buyer, close the deal and finalize the details. 

Navigating these steps while communicating with stakeholders, overseeing daily operations and supporting your employees can feel like an impossible task, but it doesn’t have to be. Working with an experienced Mergers & Acquisitions firm like Synergy Business Brokers lets you outsource the process to a skilled team for an easier, more successful sale. 

Business brokers have exclusive access to internal lists of high-value, ready-to-buy leads and will help you value your business at the right price to secure a sale without jeopardizing your earning potential. They’ll take care of everything from marketing and nondisclosure agreements to term negotiations and closing the deal. 

Synergy Business Brokers Can Help You Sell Your Business

We use a 15-step process to support a more streamlined sale. It starts with a confidential consultation with our team where we’ll discuss the possibility of a sale — even if you’re still undecided — so we can learn about your goals and concerns and gather the information we need to give you an estimated selling price. Once you’re certain you want to sell, we’ll have more in-depth conversations and evaluate your financial documents to provide a specific valuation. 

From there, we will create a marketing plan with all the essential documents, communicate with and vet prospects, finalize the deal, and oversee the closing and transition process. While we work diligently to facilitate the sale, you’re free to focus on your exit and transition strategy so you can walk away knowing you’ve done right by your stakeholders, your employees and yourself.

Explore our blog to learn more about selling a business, and fill out our confidential seller registration form today to get in touch with a broker.

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