Monday, September 8, 2008
A Business for Sale : Five Common Mistakes
Here are five key reasons businesses often fail to sell.
Lack of Exposure
Lack of exposure is usually the primary reason that businesses fail to sell, especially in Asia. Many traditional business owners continue to rely on friends and business connections to sell their business. Whilst, this way does in some cases produce a successful outcome, in others it does not work at all or it takes a very long time. Most people would not sell their house this way so selling a business should also be about attracting the most potential buyers and that requires an increase in exposure.
Newspapers are another potential trap as whilst a newspaper advertisement can reach many readers, almost all are not in the market to buy a business. They are not necessarily qualified prospects. It can take up to six months to sell a business and it is very expensive to place advertisements on a weekly or daily basis with costs potentially running into the thousands of dollars.
Web based directories are some of the best ways to optimise coverage to potential sellers as they are more cost effective and will target those buyers that are looking to buy a business. A potential buyer can simply search what is available from a website 24/7.
Newspapers are another potential trap as whilst a newspaper advertisement can reach many readers, almost all are not in the market to buy a business. They are not necessarily qualified prospects. It can take up to six months to sell a business and it is very expensive to place advertisements on a weekly or daily basis with costs potentially running into the thousands of dollars.
Web based directories are some of the best ways to optimise coverage to potential sellers as they are more cost effective and will target those buyers that are looking to buy a business. A potential buyer can simply search what is available from a website 24/7.
Several methods should be used to maximize exposure. Business brokers, social networks, web advertising as well as limited print advertising are often most effective. It is lack of exposure is perhaps the most common mistake made by sellers of businesses.
Failing to Provide Information to Potential Buyers
Withholding too much information on a business can also prevent a sale. Some sellers of business have a concern that competitors will find out information and will not provide much in the way to potential buyers to act upon. This can be quite counter-productive especially if it means that the seller loses nine out of ten of prospective buyers because there is inadequate information.
Poor Market Conditions
A recession or economic slowdown will often have an effect of putting a lot of businesses for sale simultaneously. Credit is also less available and this generally will affect both buyers and sellers of businesses. If anything, it can represent opportunity for those buyers that have plenty of cash. For sellers, it presents a real challenge, as there is no easy remedy.
Lack of Preparation for a Sale
In many cases, buyers will not proceed with a sale generally because sellers were not actually prepared for takeover. Systems, staffing, processes and financial records need to be in a state where a new owner can easily take over the running of the business. Lack of preparation can kill a deal.
Desired Price is Too Expensive
We would actually ranked price the least important factor. Mainly because it is often related to how well the seller of the business has optimised the sale of the business. Failure to optimise the business sale process will generally result in a lower price. Most business owners may think that their price is too high if the business did not sell yet it may have more to do with lack of exposure or preparation for the sale itself. Reducing price may actually be the wrong thing to do.
So if you are looking to sell your business don't think that it is only price that is important. There are several key mistakes to avoid that will greatly enhance your chance of success.
Labels: asia business for sale, business for sale
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