Patience is the key to selling your business
Selling a business and selling a house is like apples and oranges – they cannot be compared to each other. However a lot of buyers and sellers approach business sales as if they are one in the same.
Statistics show that real estate agents sell 8 out of 10 houses they list. Whilst for business brokers this number reduces to 3 out of 10. To take it one step further, if a business owner lists their own business for sale this ratio moves to 1 out of 10.
So why is there is such a difference? The three main factors I see are finance, price and patience.
Finance: Obtaining finance for a house is much easier than obtaining finance for a business. Banks have strong processes in place to allow money to be loaned on a house and hence their level of comfort is easier to meet. However when it comes to business loans, the level of information required and understanding the bank requires can take some time. Then there is the equity you need put against the business loan as in a majority of cases the bank will not loan against the business.
Price: Most buyers and sellers can look at past house sales to determine the sale price for their house. But for businesses, you can have two very similar businesses, but the price can vary substantially. For sellers of businesses it can be hard to put a value on their business as they have put a lot into it emotionally and financially. So it important to come to common ground so both the buyer and seller agree the price is fair.
Patience: The movement of house sales can occur very quickly and it not hard to see the under offers on properties you seen only listed a month ago. A seller of business see all the under offers on houses and think the same occurs for business. Business sellers must understand they are trying to find buyer in a much smaller pool of buyers, who have finance approved and agrees that the price for your business is fair. It is a large decision for a buyer to understand the business the business owner has built and be confident they can continue to experience the success already enjoyed. Business still sell but at a much slower pace to houses – so patience is the key to ensuring it occurs.
Businesses are selling and all it takes is one buyer to make this happen. But be patient when it comes time to sell as takes time to educate the market why your business is the one for them.