It takes as much effort to fold something right as it does to blossom something from scratch. What can go wrong when one wants to sell a business and how can a business-person be better equipped to face it all?
For many reasons, an entrepreneur can find oneself standing at the sunset point and ready to conclude a journey that started with a small business. Sometimes, it is helpful to end something at the right time than to stretch it to everyone’s agony. Market factors, industry dynamics, sustainability issues and the roadblocks of scale or speed are just a few triggers that spur any small business owner to consider shutting down the curtains for good. It is only with the lessons learned and the hassles encountered here that the entrepreneur in question can be ready for forthcoming ventures that will gain from all the prudence and caution acquired in this very phase. Provided, the business owner does it right. But this is seldom a picnic.
Why is it difficult to sell your business?
One often perceives that starting a business is the roughest and toughest part of any business’s lifecycle. But this is not so. It is as difficult, if not more, to wrap things up the right way. Here’s what can add the twists and thorns one rarely expects and gets ready for:
Top 5 Challenges
1. Getting the right buyer
The first thought here is who to sell one’s business too. The selection process and short-listing of the right buyers consume more than just time. Several factors affect the availability of the right buyer. The financial position of the buyer, bank loan approval availability based on his credit score and even personal funds. It is better to leverage the depth and experience of a good network here. A market aggregator of the right names and interested-parties, like say Tobuz.com, can be very handy in crossing this phase with that much-needed pace and comfort. Having a ready pool of apt players that align with the philosophy and future of one’s business can make it extremely easy to cut short all the running around for better options. Here, the only job left to do now is the more important one – the one where one’s time and attention actually matters.
Ensuing conversations and interactions with a short-listed set of buyers can be very useful in arriving at the name that would ensure that the business goes on as intended or hoped by the original entrepreneur. Keeping the DNA and values as well as trajectory of any venture intact is an uphill task, and only someone who can resonate with the first entrepreneur’s vision and orientation can take this ride further in the right way. It is also advisable to take stock of the resources and portfolio of the buyer so that there is certainty of financial and functional stability.
2. Getting the right price
Let’s say the entrepreneur has got the right buyer to sell the business too. How much can be asked and negotiated here? Especially, when one is in a spot where the need for selling gives a different vantage point to a buyer. One has to be aware of the reality and practical constraints here, but at the same time, one cannot appear desperate or worse, wipe away all the hard work and investment that has gone in so far. Getting the right buck for all the effort, ideas and traction accomplished till now is no easy feat. One needs experts and the experience of years of hands-on wisdom. It is again where negotiators and consultants on sites like Tobuz.com can arm one with enough expertise and negotiation-nuggets to use and apply so that you fetch the right price without any second-guessing or regrets.
3. Keeping the flock together
Keeping employees motivated during the sell-off period is another huge hurdle that can raise its head at any point – no warning or sign whatsoever. This can become extra-difficult when talents part away, especially the top talent ones. Sometimes such talents are an integral part of the pricing and attractiveness of the venture, per se. For example, chefs, artisans etc. It is tough enough to communicate the big news to them. To further ensure that talent is retained and kept motivated is another huge stone to wield here. A business is nothing without the minds and hands that run it. One can sever one’s ties as a management-captain or owner, but that does not mean that employees can find the new turn in the page easy to swallow and adapt to. A lot of hand-holding and support is very important to be adhered to at this stage.
4. Financial Tick-Boxes
The situation of the business, in financial terms, at the time of selling can bear a lot of implications on the deal now and the future of the business later. It is quite possible that this aspect is what has brought the business to a sell-off stage in the first place. From the seller’s point of view important factors here include time frame for taking over the business, approval from landlord if commercial property is rented, adjustment of deposits, contracts with the existing vendors and suppliers, legalities, business ownership changes, business name transfer, Government formalities like unpaid tax and accounting for capital gain.
Transparency, accounting integrity, and the right moves are some facets that can change a bad-done deal to a healthy and win-win one. Having specialists and professionals who have cut their teeth through umpteen cases such as this – well, that can be quite a relief to have on your side. Tax consultants, financial planners on Tobuz.com, can help you keep your books clean.
5. Managing the transition to a new owner
Dusting one’s hands off the moment the paper is signed – yeah, people do that but not the ones who started the venture with a clear goal and dream behind it. Walking away and abandoning the business after the sale is neither right business-wise nor personally-satisfying. Pass the baton over the right way. Be around and eager for all the work that will entail one’s knowledge and supervision for a smooth switch-over. It is also possible that you are required to be with the business for a certain period to help it transition smoothly. This puts all the more responsibility on you to be careful while entering into agreements of sale. Be there so that when one is not there, things can go on without hiccups and hassles.
Selling off, after all, needs the right mix of heart, mind, and nerves.
Better do it right than stew over it later.