“The Economy Stole My Retirement,” Wall Street Journal August 30, 2012, stated that many small business owners want to retire but can’t sell their business or can’t sell it for the money they want. Don’t for a New York minute think it’s going to get better soon. There will be a tsunami of small business owners exiting in the next decade.
In the article I noted three common items that get in the way of selling a business for the price the owner wants.
- The owners of the example businesses were way too integral to the day-to-day operations. They are creating personal not company goodwill. Step back to work on not in the business.
- Every buyer and bank still asks, “Is this business recession proof?” If not, it’s going to be tough to get a good price. There are fewer buyers than five years ago and the better buyers gravitate to the businesses that have thrived during the recession.
- Many owners have no clue as to what their business is worth. One myth of valuation mentioned in the article was an owner who said that she wouldn’t sell for what she’d been offered because of her longevity, strong reputation and client base. Longevity and sweat equity don’t create value. Value is created by profits and the more profits the higher the price.
“The market will be flooded for small businesses and the valuations will continue to trend down.” John Warrillow quoted in the WSJ