There’s Good Reason to be Discouraged about Selling Your Small Business this Year
Under his breath I hear him mutter . . .
Why do you have to be such a freaking cheerleader for the unsellable business?
That's a business broker I just met who thinks I'm discouraging to small business owners. My message is hard for him. He’s a positive guy, and he wants owners to hear only positive messages about selling their business. His positivity makes him an anomaly as a business broker. Most of the brokers that I know aren’t gushing optimists. They are hard-core realists. Which is understandable, as they spend a good portion of their day telling owners that their businesses can’t be sold
Why So Sad?
I’ve tried upbeat, but it doesn’t work. There’s just too much for small business owners to be discouraged about in this “sell a business” space. For example:
- Most owners own an unsellable business, at least 7 out of 10 according to this recent study:
Not every business will sell and a significant number never make it to market because professional, ethical advisors won’t take on an engagement with little to no chance of success. The Q1 2019 Market Pulse Survey reveals that, on average, advisors decline about 70% of the business opportunities that come their way because the business is considered “non-saleable.”
70% “non-saleable” doesn’t make me feel cheerful. Keep in mind the percentage is even higher for smaller businesses, and this 70% figure doesn't count owners that knew they couldn't sell, so didn't bother talking to a broker. Add to that . . .
- Owners aren’t planning for their exit. The study also notes:
The majority of Main Street business owners fail to plan for the sale of their business. Advisors indicated that 90% of business owners with enterprise value of less than $500,000 conducted no formal planning prior to engagement.
Businesses are non-saleable and owners aren't planning. And when these non-planning owners, with non-saleable businesses, finally decide they are ready to sell, what happens?
- Real tears start to flow as they first glimpse the cancer in the fantasy of funding their retirement with the sale of their business.
- Shock consumes their faces as they learn the real odds of selling a small business
- They start to understand the negative, life altering consequences of waiting.
They wait, and then they fail. That’s what the majority of owners do in this area (that's what I did).
I don’t think that’s anything to be happy about.
When it comes to the topic of selling our small businesses in the future, we are punch drunk.
- In a collective state of unexamined, irrational euphoria.
- Where we think success in selling is a simple ride down a gentle slope to our inevitable future.
Be more upbeat? The truth is that most small business owners need to . . .
Get Punched in the Face!
Understand your current reality:
Get up close and personal with that ugly fact. Embrace it. Bathe in the discouragement that washes over you. Take that punch right in the face, but take it now, while you can still do something about it.
Then look that unpleasant future right in the eye and say:
Get the hell out of my way.
If You Ever Want to Sell Your Small Business it Requires
A successful exit demands engagement - years before you are "ready to sell". When you take on this topic early enough, a successful sale becomes dramatically more possible and . . .
It can be remarkably satisfying.
You can create a business that you can sell. Be positive, but put your time and money into informed and engaged optimism. Start from where you (and your business) really are, not from a place of blindly optimistic sales fantasy.
But be prepared, because grasping your current, non-saleable reality can be . . .well . . .discouraging.
Start with the unhappy truth, then change that truth. Change your business. Change your future.
There’s good reason to be discouraged about selling your business: it’s the first step towards a successful sale.
That's something I'm willing to be cheery about.