Who said exit is only for the chosen few?
Businesses thrive, and businesses sink. Like people, enterprises too go through good times and bad. Competition, changing consumer preferences, other market actors, cash flow dry-up, or simply an unforeseen circumstance might have brought you to the point where things aren’t working for your venture any more. So, what do you do? Do you shut shop, liquidate your assets, and file for bankruptcy? Sure, that’s an option too. But, did you consider selling your sick business instead?
Just because you think you might not be able to pull it through much longer, does not necessarily mean that your business isn’t valuable. And it definitely does not mean that no one else will be interested in your business! While it may seem unlikely to you, there are buyers – individuals and enterprises – out there looking to acquire troubled businesses, and may be even pay a fair price for it.
So how do you go about selling your sick business?
- Diagnose and Accept the Actual State of Your Business – Often, the first step to accepting the current state of your business is to diagnose its problems accurately – sit with your partners, ask your key employees and consult your cherished customers. Do you know, many businesses carried out this exercise only to feel motivated to give it another shot? Even if you don’t feel that way – it’s ok. Just begin with the objective of getting to know what exactly is the problem with your venture.
- Look for Ways to Make Your Business More Saleable – What are those handful of things you could do right away to make your business more saleable? Identify the quick-fixes that can be readily brought in, and see to it that these are implemented. Simple changes like improved hygiene, better records and documentation, having efficient systems in place, activating quality controls, etc. can go a long way in putting your business in a better position to sell!
- Create a Turn-Around Strategy for Your Future Buyer – Think about it, why would anyone buy a business that’s not doing well presently? It’s only because they hope to do something better out of it in the future. Put your thoughts in that direction – your buyers will care about you if you care about them. What are the ways in which a potential buyer can revive your business? Under what conditions? Is there a specific set of buyers who will be able to do this better – for example a buyer with better distribution coverage, or a buyer in a complementary business?
- Get a Fair Valuation for Business – It is extremely important that you ballpark a range for fair valuation of your business. Just because you have not been thriving lately, doesn’t mean your business is not worth its salt! Also, by having a fair valuation in place, you will have realistic expectations about what price you can expect from a prospective buyer.
- Look for Potential Buyers – Now that you are ready to begin the selling process, you can list your sick business for sale both online and offline. Remember – do not share the identity of your business or your own identity anywhere! However, you can share the basic details such as the industry, location, products, along with a few words on the current state of your business. Remember, that you might have to be patient for inquiries to come in.
- Come Clean, But Don’t Settle for Less – It is important that you communicate the condition of your business clearly and completely to a potential buyer. If the buyer expresses further interest, you can share the turn-around strategy with him as well, to help him make informed decisions and to improve the chances of closing the deal. However, you need not settle for less than your fair valuation, unless you want to exit immediately at any price.
If you have a sick business or know someone who has a sick business, you now know how to go about selling a sick business. This article has been brought to you by IndiaBizforSale.com – the most preferred network to buy, sell, fund and grow businesses in India. If you have a question to ask or want to know more about what we do, please contact us on [email protected]