The truth is that we are always looking to add to our inventory of listings. We want to give potential buyers as many choices as possible. It reassures them that they are choosing from the best of several opportunities, not just fighting for the scraps of a handful of listings. But that doesn’t mean we’ll take every listing that comes our way. In fact, sometimes we have to simply decline to list certain businesses. In this article we’ll discuss the three biggest reasons why we might not take your business listing.
No Clean Books
Serious business owners don’t just have clean books and regular access to intelligible financial statements, they actively use them in order to understand the health of their business. Clean books mean not just putting charges and expenses into some catch-all category, but being as specific as possible as often as possible, so that you can see changes month-to-month, quarter-to-quarter, year-to-year.
Clean books are inextricably linked to being on good terms with the IRS. You should have no serious tax issues nor should you be playing games in order to evade taxes. While the IRS is the immediate issue for those who don’t take regular payment of taxes seriously, no buyer feels comfortable getting into a transaction with someone who feels comfortable trying to pull one over on Uncle Sam.
Almost every month in these pages we will talk about a variation of this familiar theme: have systems and processes in place. If you’re building a business to sell, it needs to be able to not just survive without you, but thrive without you. A good rule of thumb is 30 days. If your business can survive without you for 30 days, then you have something that you can probably sell. If it can’t, you probably own a job.
Every buyer dreams of being handed some kind of manual that explains everything about how the business runs. If you want to sell your business someday, you need to be writing that manual now.
There are many ways that sellers can have poor attitudes, but the two we confront most often are:
- Some fixed notion about what the business is worth, tied to emotions instead of hard financial facts. Valuations, not opinions, help determine what a business is worth. The market then determines how true that valuation is. Neither the valuation nor the market cares about what you think the business is worth.
- Slowness or obfuscation when it comes to key documents or key questions we have about the business. The way that you work with your broker is a good indicator of how you’re going to work with a buyer. If you can’t (or won’t) answer important questions or get us key documents to help us understand your business and decide whether we will accept your listing, there’s very little chance you’re going to make it through due diligence, when the both patience and timely responses get you to the finish line.
Any one of these reasons is enough for us to refuse a listing, but the good news is that each of them can be turned around, with a little self-awareness and a lot of sincere effort. If you need help with addressing these problems, don’t hesitate to contact us!