Why Do Some Businesses Fail To Sell?

There is a lot of writing on why certain businesses fail to sell. The consensus focuses on common areas of business weakness including, lack of exit preparation, unrealistic vendor price expectations, high reliance on the owner and poor financial reporting and controls…

All of these are clearly key considerations and critical when considering and planning the sale of your business.

Less is written and perhaps understood about how to find the right buyer and the appropriate marketing strategy to support finding that acquirer. One thing is certain, your exit strategy should never rely on a buyer finding you, for many, the sale of a business is a significant life event, it should not be left to chance alone and the majority of successful business sales are professionally planned and executed.

How you decide to market your business and identify the audience of potential buyers is key to any exit and the final deal you can secure. Sellers that do not understand or plan the marketing required, poorly implement the process or simply limit the activities and market reach are highly unlikely to get the results they want. Marketing failure or the vendors apathy to the marketing process therefore is another reason why some businesses fail to sell.

Experienced professionals know that any successful business sale needs momentum and competitive tension between more than one potential acquirer, this is best achieved by the business owner making the right decisions regarding their exit plans and confidential marketing early and allowing the right amount of time to do the job effectively.

A professionally managed business sale programme can maintain your confidentiality while still identifying and engaging potential acquirers, a proven, professional and well executed marketing strategy will generate a regular flow of potential buyers which will prove essential to help you secure a successful exit.

You must also remember, your business exit process is firstly a sales and marketing function, supported by a legal and accounting process. If you get this wrong and concentrate on the wrong preparation activities, your business might just become the best kept secret on the market, leaving you to negotiate your business sale with a limited range of buyers. This situation will quickly destroy your negotiation leverage and probably the deal.

The marketing initiative needs to generate regular bites and interest from new potential buyers, interest must then be carefully qualified to identify any business synergy and commercial opportunity for the buyer. Marketing must continue in full force until such a point as terms for the sale of the business are formally agreed.

Remember every business is unique, this is where the value and motivation for a buyer to acquire comes from and should form the core of the sale and price negotiation. By way of example, take two comparative and competitive businesses located in the same area. Both employ a similar number of staff and sell the same product or service, however every year, Business A, makes twice the net profit over Business B, on the surface the two businesses seem the same, the main difference between the businesses and their commercial attractiveness will be known as ‘goodwill’. Once you look under the bonnet of any business, an experienced acquirer will quickly identify the business strengths and value that sits within existing staff, management, systems, customer base, sales pipeline, brand, contracts, suppliers and partnership, business processes, intellectual property, completed training, business culture etc. the list goes on.

Acknowledging that your business is unique is your first step to a successful business sale, the second step is to understand what your business can offer a potential purchaser. Opportunity is the fuel for any business acquisition, the opportunity for the purchaser to build a larger, more profitable business which will be driven by the acquisition of your business and all that it comprises.

The greater the opportunity for the buyer the stronger your selling position. Every potential buyer will see a different market opportunity with your business, if you as the seller struggle to see the opportunity for the buyer, or the buyer only seems interested in historic profits and is negative about paying the right price, beware. I would suggest it is probably best to cut your losses and end discussions, you are almost certainly wasting your time. Invest that time you have now saved talking to the wrong buyer in finding a new buyer, an entrepreneur that is excited by your unique business opportunity.

The third and most important step is to remain patient and resilient, do not give up or lower your price expectation if you do not get quick results, that’s what the buyer want you to do. Set realistic timeframes and keep searching for the right buyer. New business acquirers enter the market on a regular basis, with a focused mind, good marketing, professional help if you need it and a realistic price expectation it is only be a matter of time until you find the right buyer.