Synopses of Numbers 56 - 66 of 66 Obstacles to a Successful Business Sale
In the last issue (#28), we provided brief Synopses of Numbers 45 – 55 of 66 Obstacles to a Successful Business Sale. This issue will supply short Synopses of Numbers 56 – 66 of 66 Obstacles to a Successful Business Sale.
"We are built to conquer environment, solve problems, achieve goals, and we find no real satisfaction or happiness in life without obstacles to conquer and goals to achieve. " Maxwell Maltz
Synopses of Numbers 56 - 66 of 66 Obstacles to a Successful Business Sale
To view the complete list of 66 obstacles, click on this article: Issue #23 – 66 Obstacles to a Successful Business Sale.
Following are brief summaries of obstacles 56 – 66:
56) Environmental Risks
To help eliminate buyers’ perceptions of risk, where there are possibilities of environmental contamination, sometimes it’s best for the seller to “buck up” (a few thousand dollars) for a Phase 1 Environmental Site Assessment before selling the business. Doing so can be the difference between retaining and losing an otherwise qualified buyer.
57) Employee/Labor Problems
Do your best to try to resolve any employee or labor problems before selling the business. If any unresolved issues remain, disclose them upfront so there are no surprises in the due diligence phase.
58) Pension Plans and other Post-Employment Issues
There can be complex legal issues associated with terminating or transferring employee benefit plans. Get your attorney involved early and be prepared to intelligently discuss resolution options. Disclose the existence of employee benefit plans very early in the sale process.
59) Changes in Competitive Threats or Business Environment
For example, Blockbuster caused the closing of many family-owned video stores. Then Redbox and Netflix were the primary reasons for Blockbuster’s bankruptcy. Staples, Officemax and Office Depot resulted in the demise of many locally-owned office supply stores. Always be aware of developments in your industry.
60) Lack of Chemistry Between Buyer and Seller
Good chemistry with the buyer can be a significant factor in achieving success during negotiations. On the other hand, poor chemistry can be a significant obstacle to successful negotiations.
61) Lack of Barriers to Entry
If the barriers to entry are very low, and the advantages of buying an established firm are not overwhelming, buyers may opt to start a business on their own. It’s a good idea to be prepared for the buyer question, “What are the barriers to entry for this type of business?”
62) Problematic Vendor Relationships
In addition to acquiring your customers, buyers are also acquiring your vendor relationships. Too much concentration/reliance with one vendor can be as bad as customer concentration issues. Prior to putting your business on the market, try to resolve as many vendor problems as possible.
63) Accounts Receivable Collections Issues
Untimely collections of accounts receivable requires a higher investment in working capital, creating another financing obstacle for buyers. Unreliable collection of accounts receivable and bad debts create a high risk factor in buyers’ minds. A commitment to improving timely accounts receivable collections makes good sense at all times, not just when considering a sale of your business.
64) Undisclosed Liabilities and Debts
The due diligence process will almost always uncover any “skeletons in the closet.” Negative surprises discovered in due diligence are one of the primary deal-killers. All liabilities and debts should be disclosed early on in the sale process.
65) Poor Location
If your location has a negative impact on your business, or on the perception of your business, consider moving it prior to making the decision to sell.
66) Sellers' Unwillingness to Stay for a Transition Period
In most instances buyers expect sellers to work with them post-closing to provide whatever training may be necessary and to help provide a smooth transition for the new owner. Depending on the circumstances, the time frame can vary considerably. It’s important to be flexible and try to understand the buyer’s needs.
"We have to embrace obstacles to reach the next stage of joy." Goldie Hawn
Overcome the Power of Inertia
Overcome the Power of Inertia and call a business broker for a free consultation. Many brokers offer no-charge, no-obligation evaluations of small businesses. They can provide a broker opinion of value and help you identify obstacles to a successful sale as well as opportunities for improvement to increase the value of your business. That is a great way to start planning for a successful and profitable exit from your business.
