selling your own business

5 Reasons Not Sell Your Own Business to Avoid Signing a Bad Deal

A few years ago I had to sell my business, an eCommerce site that was profitable and was reasonably stable.

The experience of dealing with business brokers and prospective buyers taught me key negotiating skills and more importantly the ability to sniff out a bad deal.

While there are plenty of posts that talk about the good reasons to sell a business, this post will take a different direction.

We will reveal 5 scenarios where it’s best to call off the deal and look for other buyers.

When there is Risk of Breach in Confidentiality

The last thing you want is to make your intention of selling your business public knowledge. You don’t want your employees to get a whiff of the fact that you are looking for a buyer.

While it may seem deceptive, the reason for that is practical. Employees tend to think that a business being sold is an indication of poor business performance.

That can encourage them to look for other jobs and in turn destabilize your operations. Considering that it takes more than a few months to find the right buyer, the drop in the revenue and operational efficiency can force you to sign a bad deal.

The Deal Jeopardizes the Future of Your Employees

If you run a closely knit unit, then it’s your responsibility to ensure the future of your current employees.

You should ideally find a buyer who is as excited as you were when starting this business and has a clear vision for expansion. Stay clear of competitors who are looking to buy to increase their market share.

When the Revenues are Temporarily Down

One of the most critical factors that determine the price of an online business is revenue. A company that has witnessed a temporary drop in revenue will have a difficult time finding interested buyers.

What’s worse is that some buyers would use this to negotiate a much lower price than the business is actually worth. If you know for a fact that the revenue loss is temporary, then it’s best to wait out the storm and put the site back up for sale when things recover.

If You Are Dealing with a Person Trying to Steal Information

Not everyone who shows interest is an actual buyer. There many who would schedule a meeting just to extract your client list and operational secrets.

This is why it’s important to pre-qualify anyone who shows interest before providing any information. A business broker can help in this aspect. They can mediate the deal and only pass the information on if the buyer is genuine.

When You Don’t Get Enough Time to Evaluate Other Options

The market value of an online firm is dependant on a lot of factors.

One of them is demand. Buyers may try and force you to sign a seemingly attractive deal quickly before you get to weigh in all the options.

This is a common tactic employed by website flippers. If someone is rushing you, don’t be afraid to walk away.