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Reasons to Sell

Reasons to Sell

For all the reasons people decide to sell their businesses, some will result in a better outcome than
others. 
 
Retirement
 
Retirement for a business owner is when they value time over more money. This is not age-based, but
there is a correlation.
 
Baby boomers are now starting to retire from their businesses. With their children off doing other
things in most cases, their only real exit strategy is to sell.
 
These businesses usually have a solid base to build on and the vendor usually has the patience to see a
good outcome. The only downside is if the owner has stayed on too long.
 

Business too big for the owner
 
Skills needed to run a big business differ to those needed to run a small business. Some businesses
outgrow their owners. Once at a certain size, it takes a different set of skills to take the business
forward. These businesses present a fantastic opportunity for the right purchaser.
 

Run out of money - growing too quickly
 
May need to sell to avoid closure. The business may be under-capitalised or may be starved of working
capital due to high growth. Fast growing businesses consume cash for working capital and expansion.
 

Sick of it – want to do something else
 
Owner’s lack of enthusiasm may have spread to the organisation. The new owner should be a welcome
sight to staff. Good opportunity.
 

Ill health
 
Genuine ill health places the vendor in a poor bargaining position unless the marketing process yields
competing purchasers. Time and patience strengthen the vendor’s position and these may not be
available in this situation. Many businesses suffer along with the ill health of their owner. Sometimes
the reverse is true, where the ill health of the business has spread to the owner.
 

Burnt out, need a holiday
 
This business may be difficult to run and highly dependent on the owner.
 

Run out of money – business losing money
 
Owners hoping to pass their problems on to the next person rarely do well in the sale process. The best
hope is to find someone who has the expertise, or can find something of value in the offering, to bail
them out.
 

Advice for Prospective Vendors
  • Determine early on the market value of your business
  • Prepare well, having at least 3 years trading history available
  • Explain variations in performance, especially in recent years
  • For location-sensitive businesses, secure a good lease with options, to provide greater security for purchasers
  • Take steps to minimise the impact on the business of a change in ownership
  • Choose your agent & other advisers carefully & work as a team
  • Allow adequate funds for marketing
  • Be patient
 
 

 
Business information service providing guidance and information for small businesses including advice on exiting your business
 
Advice from CPA Australia on selling your business
  
Information on succession planning 
 

Supertrac Business Divestments specialise in sales and acquisitions of medium and large Australian businesses. Visit their smallbusiness[HQ] directory listing here.
 
Important - Read This: This information is intended to provide general information only which may not be applicable to your particular circumstances.  You agree to access this information at your own risk and that First Point Media is not liable to you for the content of the information or any reliance by you on this information.