If you are interested in selling your business, there are some basic mistakes business sellers make that can absolutely be avoided if you know what they are. Business transactions are inherently complex, so knowing what the most common pitfalls are can help to streamline the process by avoiding them.

Big Mistake #3: You refuse to accept an offer that is not all cash.

Your business means a lot to you, and the value you place on it may not be objective because you add to the value all of the time, energy and money you have put into it over the years. Even if you are able to be objective and take the advice of your business broker when pricing your business, you may run into problems when you decide what type of payment you are willing to accept.

What would be ideal? An all cash, full price offer is always ideal, but in the reality of the business market this rarely happens. There are many sellers who enter the market demanding all cash, but this is a huge mistake.

Why? Great buyers are few and far between, and there are hardly any buyers in the market who can come up with the capital to make all cash offers. Buying a business is an expensive proposition, and most small business owners and prospective small business owners don’t have that kind of cash available.

What can happen if a seller demands all cash? The short answer is your business won’t sell. Sure, there have been cases where a seller wanted all cash and all cash is what they got, but this is an incredibly rare scenario. The reality is your business will remain listed indefinitely and you will miss many great potential buyers.

How can a buyer who can’t raise the capital to make an all cash offer be a great buyer? A great buyer should not be defined by capital alone, they are defined by their ability to pay.

What do we mean by that? The most common situation in today’s business market is for a seller to offer seller financing. This is means a buyer brings a substantial down payment, and then an agreement is made for the buyer to pay for the remainder of the business over time directly to the seller. Offering seller financing can be a great option to offer when you sell your business.

Why? Seller financing opens your business to a much larger pool of buyers and it shows that you have faith in the future of the business, so it is an option that is good on two levels. You will have  a much better chance of selling if more buyers are able to make offers, that goes without saying. Also, buyers are always a bit suspicious of anyone who is willing to sell a perfectly good business. By offering seller financing you are letting buyers know that you have faith in the future of the business because if the business fails, you don’t get your money.

The moral of the story is be flexible. You may get an all cash offer after all, but chances are by offering seller financing you will find a great buyer and still get the price you want from your business.

Do you have questions about what types of options you should offer to buyers? Are you still determined to accept only an all cash offer? Please leave us a comment or question here, and we will be happy to assist you with questions about your business sale.

Want to read Mistake #1: The Cold-Feet Seller? Click here.

Want to read Mistake #2: The Box-O-Paper Financials? Click here.

Want to read Mistake #4: Letting Unqualified Buyers in the Door? Click here.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com