Setting A Realistic Business Opportunity Sales Price
Setting a realistic business opportunity sales price is fundamental to a successful business sale. Considering only 20 to 25% of small businesses sell, right-pricing is essential for selling a small business.
There are many reasons this statistic is so common, but the main reason is that owners don’t realize how important it is to plan for their business’ sale. All sorts of obstacles can be encountered which could have a negative impact on salability.
A high-priced offer price is often a significant obstacle to the sale of a business.
Sellers who attempt to sell their business for an exaggerated price are a primary reason for why businesses don’t sell. Some sellers may deliberately overprice their business in order to leave room for negotiation. Untrustworthy business brokers may mislead others by accepting overpriced listings because they want to make money. Owners may not realize that their business is too expensive.
Most small businesses have a very narrow range of value (within 10%) based on business valuations. It is counterproductive to price the business higher than the upper end of the range in order to negotiate. Qualified buyers who are serious about buying a business, and have already been searching for a while and gone through the disappointments of having to deal with unrealistic expectations of sellers, will give up on businesses that they feel are too expensive. They don’t want to deal with the hassles.
Sellers who overprice their business may not actually be committed to a business sale. They overprice the business as a way to sabotage the sale from the onset. A business seller that tries to sell with incomplete financial information, and ignores the potential obstacles this causes is not seeing their situation clearly and setting themselves up for failure.
Risks of Setting An Unrealistic Business Opportunity Sales Price
Businesses that are too expensive are a major problem in the business market. Some business brokers who are looking to sell businesses and will accept listings that are too high in price knowing that the market will eventually adjust their expectations. Brokers are hopeful that sellers will accept offers much lower than their asking price once they realize the true value and worth of the business.
This is compromised strategy from the onset as it sets up the owner for a painful and lengthy sale process that rarely ends in their favor. Brokers who are not honest with owners in setting realistic pricing is a big problem in the failure to sell small businesses. Brokers who are honest with their clients will give feedback about the real value of the business and won’t accept listings that have unrealistically low prices. It is crucial to find the right broker to represent you in the sale and purchase of your business.
Benefits of Setting A Realistic Business Opportunity Sales Price
Although selling is not always easy, it doesn’t have to be difficult. It doesn’t matter how hard you try to sell at a overinflated price. While there are no benefits to trying to sell the business at an unreasonable price, there are many risks. It can be stressful to adjust your expectations, even if you know the business is too expensive. Sometimes you may feel so discouraged that it is difficult to keep the sale going. Due to the lengthy process of trying to sell businesses, buyers will not be interested in overpriced companies.
Setting a realistic business opportunity sales price increases the likelihood of both offers to purchase the business and the likelihood that the business will be sold. Conversely, setting the price too high discourages offers and leads to buyer mistrust.