The Five Negative Attributes
Nearly every business will demonstrate at least one of the five negative attributes that cause Buyers concern. Being aware of these negatives can assist you to prepare the business for sale, and deal with any objections when the Buyer raises them. What are the Five negative attributes? they are: 1. the need to carry large stockholding 2. the need to carry debtors 3. managing staff – or relying upon “key staff” or the proprietor. 4. long trading Hours 5. Key product or client. Your business probably possesses at least one or two of these negatives, and working on these, can make your business a more saleable, more desirable option for many buyers simply by making some simple changes to these areas. For example, a large rural tyre dealership was recently offered for sale. the asking price was reasonable, and the business was very profitable, but it held $850,000 of stock, and carried over $200,000 of debtors. and after 25 years, the owner was the business. Professional advice was given to the owner that the business could not be sold until the stockholding was reduced, the debtors reduced, and his name taken off the business. By making those changes the business sold for the asking price, and the buyers were able to easily manage the business and grow into the future. – Try to run your business with the lowest manageable amount of stock. – Keep your debtors under control, and to the lowest possible level. – A “managed” business is worth much more than an “owner operated” business – If you trade long hours make sure it is beneficial, and not a problem. – Try and ensure that your business does not rely too heavily upon either one employee, the sale of only one or two products, or sales to only one or two clients. Buyers will always feel negative about these “nasty” areas, but by being aware of this, controlling these, you will help eliminate buyer resistance, and move forward towards a successful sale.