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Bradly Stevens MBA, LUTCF®, CLU®, ChFC®, WMCP®, CEPA™

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Why Small Businesses Fail to Sell

Why Small Businesses Fail to Sell

| February 17, 2023

In many cases, a significant portion of a business owner's net worth may be tied up in the value of their small business and its assets. However, what happens when that business can’t be sold?

According to the Small Business Administration (SBA), only 20% to 30% of small businesses are sold. Additionally, a study conducted by BizBuySell, an online marketplace for businesses for sale, found that only 20% of businesses listed for sale actually sell.

 

  1. Overvaluing the Business: Many small business owners overvalue their business, making it difficult to find a buyer who is willing to pay the asking price. According to Forbes, overvaluing the business is one of the biggest reasons why small business owners fail to sell their business.
  2. Lack of Preparation: Some small business owners fail to prepare their business for sale, which can lead to a lower valuation and a longer time to find a buyer. A report by Inc.com suggests that lack of preparation is a key reason why many small business owners fail to sell their business.
  3. Poor Financial Records: Small business owners who do not keep accurate financial records may have a difficult time selling their business. Potential buyers need to see a clear picture of the financial health of the business before making an offer. This is also supported by Forbes.
  4. Not Seeking Professional Help: Many small business owners try to sell their business on their own without seeking professional help. A report by Business News Daily suggests that small business owners who do not seek professional help may miss out on potential buyers and could have difficulty with the legal and financial aspects of the sale.

 

As a Certified Exit Planning Advisor (CEPA™) I have learned that exit planning doesn’t start when an owner is ready to sell. Now is the best time to start preparing your business for your eventual exit. 

To learn more about what you should be doing today to prepare you business for an eventual exit schedule a “Business Owner Strategies Consultation” by clicking here

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