The 7 Most Costly Mistakes Business Owners Make When Selling Their Business... And How To Avoid Them!
And... Why The Lion's Share Of Business Owners Who Successfully Grow Businesses MEET WITH DISASTER When They Attempt To Cash Out
Dear Fellow Business Owner,
Selling a business is completely different from selling a car, house, real estate, or anything else for that matter.
It's a lot more complicated which means you need to do a lot more thinking and do a lot more work in order to get the price you're after. For instance, did you know...
- The bulk of businesses advertised or listed for sale NEVER SELL at all. Our experience has shown that it is as high as 80%!
- Of the small number that do sell, only 1% sell for the maximum, hoped for price
That's a tragic way to end years... even decades of hard work. So don't let this happen to you. Do Not settle for far less than you deserve for your lifetime of hard work. Do Not wind up having to “fire sale” your business just so you can eventually escape to retirement. Do Not leave yourself exposed to a sad ending after working-your-butt off to grow it over all those years.
Who Are You And Why Are You Revealing This Information?
My name is Hans Ten Bruin and I'm the founder of Australian Business For Sale. For the past 21 years I've been involved in helping business owners sell their businesses and cash in on a lifetime of hard work. I'm revealing information certain business brokers, newspapers and web sites don't want you to know for three main reasons:
REASON #1: If you end up paying through the roof for advertising which doesn't deliver, you'll end up throwing everyone helping businesses sell into the same bucket - including my business and the businesses of other competent professionals. Odds are, if the medium you try and sell your business through stinks, you'll be extremely reluctant to do it again in the future and could lose out on tens or hundreds of thousands of dollars as a result.
REASON #2: I've been in this industry for a long time and there's nothing I HATE seeing more than dodgy scams, bad brokers, web sites or publications that rip people off and make my entire industry look bad.
REASON #3: You can think you're on the right track for 6 months or more without even knowing what you're doing wrong. I frequently speak with frustrated business owners who are kicking themselves they didn't know about some of these mistakes sooner.
Okay, now that you know who I am and why I am doing this, let's talk about The 7 Most Costly Mistakes Business Owners Make When Selling Their Business!
BIG MISTAKE #1: Waiting For Buyers To Come To You Rather Than Proactively Seeking Them Out
Many business owners believe all they need to do is let people know your business is for sale and buyers will be pounding down your door. BUT IT'S SIMPLY NOT TRUE. In fact, if you want to successfully sell your business, you need to treat the process with the same level of determination as you had when you first started your business.
Just like anything else in life, if you want to get the right price for your business, you can't leave it to chance.
Especially considering the fact it's not a sellers' market - IT'S A BUYERS MARKET and because the baby boomer generation is all going into retirement, it's going to get harder and harder to find a buyer over the coming years.
Here are some alarming statistics: 80% of businesses in Australia are owned by baby boomers and, according to a 2004 CPA Australia report titled Get Out While You Still Can, “strategies for succession are urgently required as the owners of nearly half a million enterprises nationally have already celebrated their 50th birthdays, and their ranks are growing by 10% annually.” (Source:- Certified Practising Accountants Australia (2004), ‘Get Out While You Still Can’, 31 August 2004.)
The bottom line is you need to create an exit plan. And you need to implement it. Most business owners don't follow this advice - and that's why...
The Overwhelming Majority Of Business Owners Who SUCCEED At Creating Their Business Fail Miserably At Maximising Their Exit
And this is an awful way to end your business - with a FAILURE. But I can tell you right now there are thousands of “horror stories” of disappointment and frustration from business owners all over the country who thought a buyer was going to magically appear and give them exactly the price they were hoping for. Yeah, right!
BIG MISTAKE #2: Expecting A Quick Sale With The Least Possible Advertising... But Having No Idea How To Achieve Your Asking Price
Want to know the single best way to get a quick sale? Halve the price you're asking for your business. You don't need to be a brain surgeon to work that out.
However if you look through advertisements of businesses for sale, you'll often see lines like “urgent sale” or “owner must sell.” But the problem with this is you're telling the potential buyer you are desperate to sell. So this means...
- You are desperate
- He is in no hurry
- And the question going on in the back of his mind is “why is he so keen to sell”
And if you've ever been in any form of negotiation, you'll know that all you are doing is stacking the cards in the buyers favour. Essentially, an astute buyer will negotiate even harder as a result and use your urgency as a weapon against you.
Remember, buyers are always looking to use your weakness to their advantage in a negotiation. And that's why you should never get your heart set on one prospective buyer and stop advertising. The reality is the value of your business is based on the rules of supply & demand. The more demand: the greater the value. The less demand: the lower the value. So keep advertising and generating new prospects in order to “PUSH” buyers into making a decision and ensuring the odds are stacked in your favour.
You see, even though you may want to sell your business quickly and for the highest possible price, the reality is the buyer - in most cases - wants to buy his business slowly in order to avoid buying a lemon. So all you do by trying to get a 'rush sale' is shoot yourself in the foot. And all you do by pulling your advertising off the market is stack the law of supply and demand in your buyers favour... allowing him to take forever to make a decision.
Believe me, these mistakes can stop a sale... and the cost of not selling in the end is far more expensive than the cost of selling.
BIG MISTAKE #3: Not Preparing Your Business For Sale
There's an old adage which says “If you fail to plan - you plan to fail.' And this is certainly the case when it comes to selling your business. Just like anything else in life, the easiest way of doing something is rarely the way to make the greatest amount of profit. Essentially, you should put as much investment of your time and energy into the selling of your business as you put towards building your business. Here's a quick checklist to get you started...
- Last 3 years Balance Sheet
- Last 3 years Profit & Loss
- Financial statements and projections that illustrate your company's revenue and growth potential
- If possible a procedures manual which documents exactly how to run the business most effectively (make sure you include all the unspoken things you and your staff do on a daily basis)
- Catalog all of your businesses assets, from property to warehouse to employees to inventory.
The truth is selling a business is not like selling a home and it is a good idea to have all the supporting documents available spelling out everything the prospective buyer will want to know about your business so they can make an informed decision.
And you also need to know how to create a professional advertisement to get the phone ringing. Sadly, many business owners run ads with very little copy, giving inadequate information to excite prospective buyers into making contact or attracting unqualified buyers.
Never forget the fact the laws of supply and demand are not in your favour. Especially considering it's not a seller's market - but a buyers market. There are currently a myriad of businesses on the market and literally a smorgasbord of businesses for buyers to choose from. And the truth is the baby boomer generation is all going into retirement, it's going to get harder and harder to find a buyer over the coming years. That's why you need to make a big effort to differentiate your business from all of your competitors.
It's also why you must ALWAYS take a deposit (10% is going rate) before you take your business off the market. A handshake deal simply doesn't cut it. When it comes to selling your business, money talks. Ignore this warning at your own risk.
BIG MISTAKE #4: Picking The Wrong Advertising Medium For The Wrong Reasons
If you want to sell your business, you'll need to let people know about it. But which advertising medium should you opt for...
- You may be tempted to place your advertisement in a major Saturday newspaper: However, keep in mind you will pay top dollar for your '24 hours of fame' and only a small percentage of people who purchase that paper will actually be interested in buying a business. By Monday, the newspaper will have disappeared and you will have to shell out more money for additional advertising.
- You might be tempted to use a broker: but the reality is not only will you need to pay your broker a tidy commission (anywhere from 5% to 10%) they'll often ask for an upfront marketing / advertising fee... a long term listing... their full commission even if the businessis sold on an installment basis... and may charge you even if you sell the business yourself. So make sure you do your research and read the fine print carefully or, alternatively, call us and AB4S can help you find a trusted broker..
- You might also be fooled into an offer from a web based advertising service which says “we will put it on the web site until it sells”: But here's what you really need to be able to identify. It doesn't matter what promises a web site marketing company makes, the question remains...
How Much Traffic Does Their Web Site Attract
... because who really cares how long your listing is on their site - if virtually nobody is visiting the web site, because you can’t find it through search engines, IT'S ALMOST CERTAINLY NOT GOING TO SELL.
It sounds good: “until business sold” and this probably makes you feel that you can’t lose, but here’s the catch.
Astute business buyers see that your business is on a website that offers until sold. If your business is still there after months or even years the buyers know you have problems selling and will negotiate hard – you lose.
Some of the websites are just a few months old and need content to survive and establish themselves to get a ranking in Google.
These website owners are not interested in your cause, they just throw a line that ‘suggests’ and some vendors take it hook, line and sinker.
Every business owner knows that if you offer services / products cheap there must be a catch or an undisclosed angle that is deliberately being withheld.
With the rapid rise of anything on the Internet there are websites with all sorts of claims. Anybody can offer a service without any proof.
Buying a cheap web listing is not cheap – it is expensive because you get what you pay for. Expecting / hoping to sell a business without any costs as to advertising / marketing is a pipe dream. Selling a business is a serious process. Take our word – we have been around for 22 years and have experience to give you.
BIG MISTAKE #5: Taking Your Business Off The Market In Good Cash-Flow Times And Putting It Back On The Market In Bad Cash-Flow Times
Have you heard of Warren Buffet? He's one of the richest men in the world ($62 billion - 2008) and here's what he has to say about investing: “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what's popular and do well.”
And a very similar philosophy applies to businesses. When times are tough, nobody wants to get into business, but everyone wants to sell. Obviously, this means you have more competition and less buyers. So the law of supply and demand is working against you.
But when times are good, everyone wants to keep their business. This means you have less competition. But you also have more buyers who want to capitalise on good times. Now the law of supply and demand is working in your favour.
Now the truth is a good business will sell in good times or bad. But don't make the mistake of pulling it off the market and putting it on the market based on your cash-flow situation because the reality is when your buyer looks at your business and sees positive figures, they'll have the most confidence to move forward with a purchasing decision.
BIG MISTAKE #6: Having Unrealistic Expectations For The Sale Of Your Business
Businesses generally don't sell in weeks. It takes months to sell and if it's not done as per the guidelines provided in this report, it may take years.
Having unrealistic expectations for the sale of your business can cause you to make mistakes which cost you money.
The first mistake business owners make is dropping their asking price as soon as they don't get many inquiries. It's not uncommon for someone to slash their prices by $10,000... $50,000 or even $100,000. The reality is you would be better off investing in more effective marketing / advertising to get the price you want. The cost of not selling (money, anxiety, frustration, sleepless nights, etc) is far greater than spending money on effective marketing and advertising.
The second mistake business owners make is advertising in the wrong area, through the wrong medium and in the wrong way. And when they don't get the results they are after they assume there are no buyers out there and selling via advertising (online or offline) doesn't work and throw their hands up in the air in despair.
BIG MISTAKE #7: Not Using The “Buyer Matching Service” Of Australian Business For Sale To Assist You In Selling Your Business
For over 21 years, Australian Business For Sale has been dealing with buyers and sellers and through this experience we have identified the major problems in selling a business; why most vendors are not successful in selling their business and why many buyers find it very difficult to find a business which suits them.
Our company is considered a leader in this field as a result of this experience, we have created a “Buyer Matching Service” whereby we match our family of buyers desiring help in finding a successful business with those looking to sell their business.
And the good news for you is we are not agents or business brokers and we do not take commissions. What's more, we manage the marketing of your business for sale through our Buyer Matching Service, this is comprised of 7 integrated services including...
- Buyer forwarding via email
- Website internet directory (top ranking website, No1 in Google) www.businessforsale.com.au
- National Business For Sale Directory, display advertising on a 1/2 page. Directory is available from Newsagents nationwide
- Exposure at the Business Opportunities and Franchise Expos across Australia
- Support service via email
- Exclusive one-on-one relationship with a business advisor.
- Business Growth tips.
And all these services are not going to cost you a cent if you are currently in the process of selling your business... or are looking to do so in the near future. If this report makes sense to you and you want to see if we can help you then give us a call on 02 9281 4599 to get a Cashing Out Package and find out everything you need to know about our Buyer Matching Service and why it goes way beyond anything else that's available.
Thank you so much for taking the time to consider. I am looking forward hearing from you and possibly working with you in the near future to help you sell.
Warmly,
Hans Ten Bruin
P. S. One more thing - it's important.
I'm fed up with hearing other companies compare their service with ours. I've been working in this industry for over 21 years and it's taken years of fine tuning to create a system as advanced as this. That's why I stand behind my 200% No Bull Money Back Guarantee you'll find out all about it when you speak to us.
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