Do You Have a Sellable Business?
4 out of 5 Businesses Won’t Sell
Do you have a sellable business? Statistically speaking, maybe not. According to a study done by BizBuySell, 4 out of 5 businesses won’t sell to an outside party. Unfortunately, most small business owners aren’t focused on building a sellable business. Instead, they are focused on using their business to create an income. This isn’t a problem when operating the business, but is a problem when it’s time to sell or exit the business. When getting close to a sale, business owners should start to increase the sellability of their business.
Do You Have a Sellable Business?
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What is Sellability?
Sellability is a term we’ve coined to describe whether a business can be sold or not. It measures how the business scores in 8 key areas. (To learn more about the 8 Drivers, visit our maximize your sale price webpage). While there are 8 Drivers of Sellability, 4 Drivers have the largest impact on business sellability. Few businesses have all 4 of these key traits. This is why 80% of business don’t sell on the open market.
The scale has three classifications: sellable, sellable at a reduced price, unlikely to sell.
A sellable business has most of the traits a business buyer is looking for. A sellable business has strong financial performance, owner independence, little-to-no customer concentration, and predictable revenue. These key traits are crucial to getting top-dollar for your business.
Sellable at a Reduced Price:
A business that is sellable but likely only at reduced terms typically is a good business with a few areas of concern. It may have customer concentration concerns or be too dependent on an owner. Either way, a seller will likely have to reduce the sales price to get it sold.
Unlikely to Sell:
4 out of 5 businesses fall into this category. These businesses typically have issues that would be difficult for a new owner to overcome. If a business is in this category, a business owner is better off spending some time addressing the issues and selling once the issues are resolved.
Why Sellability Matters?
Sellability impacts whether you will sell your business. It also impacts how much a buyer is willing to pay for the business. Overall, it helps you understand what buyers are looking for when they look for a business to buy. There are more buyers than sellable businesses. Highly sellable businesses sell quickly at top prices. Less sellable business will likely not sell and if they do, the owner will have to take a haircut on terms or price.
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A Business Can Be Made More Sellable
There is good news. If your business isn’t sellable as-is, it is fixable. Once you know what matters to buyers, you can make changes to improve your business’s sellability. We recommend taking our ‘Do You Have a Sellable Business’. The assessment will give you a no BS answer to whether you have a sellable business. As a business owner, it is important to be aware. An informed business owner makes informed decisions. Nothing could be more important to your financial future than selling your business. Take the steps now to ensure buyers will line up to buy your business when the time comes.