My Business Won’t Sell – 9 top Reasons Why?

Every business will sell – if priced correctly.  The asking price is typically based on a multiple of seller discretionary cash flow (SDCF) with various factors to be considered to establish the multiple used. If you ask 100 people, everyone will have a different opinion, but the only factor that really matters is what a buyer is willing to pay, which in most cases is established by what similar businesses have sold for with the same SDCF range.

I have found from experience; the following are the top issues what the phone does not ring.

  1. Unclear or no financial records other than a tax return, including poor accounting practices and poorly formatted financial statements.
  2. Undocumented cash sales.
  3. Excessive personal expenses.
  4. A price/SDCF ratio which has nothing to do with reality.
  5. Declining sales, non-repeat customers, most all customers are one-up.
  6. Issue with business facility lease expiration date; facility has not been well-maintained; facility is messy, dirty, and/or disorganized.
  7. The business is the seller, no middle management, business excessively dependent on sellers. presence, no tenure of employees, or high employee turnover
  8. High concentration of sales in limited number of products or services, lack of diversification.
  9. Minimal or no repeat customers.