By background, I am a CPA (no longer licensed). I spent 5 years in public accounting and 5 years as controller in communication industries. Then I moved into consultative selling – 6 years in executive search and 10 years in architectural product sales.

In 2000, I started to develop a business plan to pursue angel funding for my own internet creation – yourleaguestandings.com. It was great idea but the internet crash of 2000 ended that dream.

So, I entered the world of business brokerage – a perfect fit for my accounting/financial and consultative selling skills. Business brokerage is a tough gig. dollar_key_400_clr_4453Because it is not stressed nearly enough in brokerage training, it took a while to learn the key to success – managing seller’s expectations.

Far too many business brokers fail to help their client (seller) understand the obstacles they face and fail to set realistic expectations. As a result, most owners face huge obstacles to selling their business and have unrealistic price expectations. Under such conditions, most businesses won’t sell, and if they do it’s a painful process for everyone involved (the broker, the seller, buyer candidates, families, lenders, and advisors) as owners slowly reach the realization that they will have to compromise considerably beyond their expectations to close a deal. That is one of the reasons only about 20-25% of small businesses ever sell.

In my latter years in business brokerage, I sold about 90% of the businesses I listed. But, because they did not meet my criteria for readiness or salability, I only listed about 1 out of 20 businesses I evaluated. Isn’t that sad? I had to disappoint and lay the bare truth on about 19 of every 20 owners. I informed them of the obstacles they faced that precluded salability, made suggestions on how to overcome them, and provided recommendations to increase profitability. But a one-hour follow-up meeting to an evaluation is insufficient time to provide a full education on how to prepare to exit your business.

If only owners realized the need to plan for the sale of their business ….

When released, I’m very hopeful that “How to Plan and Sell Your Business” will enable other business brokers to also sell 90% of their listings, but more importantly, I’m hoping that 25-50% of the businesses they evaluate will be in a state of readiness and salability (with obstacles conquered).

Connect with me and view my profile on LinkedIn.

6 Responses

  1. Jim:

    I read with interest your blog about business owners and the hurdles related to expectation setting. We work with business partners/owners in either resolving ongoing ownership conflict, or doing preventative work with them–often involving setting expectations around various aspects of their partnership (roles, contributions, ownership, compensation, dispute resolution, family, etc).

    As you know, in some instances the conflict can be the basis for an exit decision. In other instances, where the transaction is to provide for partner/owner liquidity, the partners must get aligned and resolve differences before they can realistically expect to attract or employ external capital.

    We also believe it is important that the broker and private equity communities are aware that there are methods and expertise available to address these very real hurdles to transaction completion.

    Principal, BMC Associates

    • Stewart,

      Let’s stay in touch. “How to Plan and Exit a Business” will identify and discuss 66 obstacles to a successful business sale and the issues you consult on are definitely obstacles that must be addressed.

      Thanks for commenting.

      Jim Stauder

  2. Jim,

    Your statistics reflect similar numbers I quoted in my blog a few weeks ago. Why Do Only 25% of Saleable Companies Exit? http://wp.me/p2MUTo-db
    See also my post on Why 88% of business owners don’t have an exit Plan http://wp.me/p2MUTo-c7.

    I wonder what you think of my comments in these posts.

    I wish you all success in 2013 with your new blog.

    • Suki,

      I’ve visited your blog and read the articles you linked to. We definitely agree philosophically about the need for and importance of exit planning. I have subscribed to your blog. Thanks for commenting.


  3. Jim, I would like to connect, we share many of the same thoughts. I feel the two big issues are buyers don’t see the value of the existing business well enough and sellers fail to deliver a product that looks buy able. We need a education process for all.

  4. Jim, I would like to finally find a reputable company to work with to get our customers SBA loans. I looked at you on linkedin and it would not let me connect or view your profile without paying. Could you please email me your contact information michaelhenry@gulfco-leasing.com
    or please call me at 877-397-5250

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: