Distressed Business for Sale: Tips to Sell

COVID-19 has had a devastating effect on South African businesses, with many being shut down indefinitely. Even major companies like Ster Kinekor took a huge knock and have had to close their doors, or file for business rescue assistance. Many others are in treacherous waters and have become distressed businesses. But this doesn’t necessarily need to spell D-O-O-M. There are people who are specifically looking to buy distressed businesses. If you are a business in distress, there are tips that you can follow to sell your business, and you can do it conveniently online!

Bronwen Barnard

12 March 2021

Summary

Many others are in treacherous waters and have become distressed businesses. But this doesn’t necessarily need to spell D-O-O-M. There are people who are specifically looking to buy distressed businesses. If you are a business in distress, there are tips that you can follow to sell your business, and you can do it conveniently online!

What is a Distressed Business?

A distressed business is one that is having difficulty paying off their financial responsibilities. This can be caused by cash flow issues, sales declining, unforeseen business expenses, or other factors.

How to Sell a Business in Distress

It’s a tricky balancing act when it comes to the selling of a distressed business; on the one hand, you need to focus on presenting potential buyers with information that shows them the value of the business, whilst on the other hand, you need be candid about the reasons behind the distress. There are a few ways to entice buyers without withholding information.

Manage Cash Reserves

Businesses in distress need to properly manage their cash reserves, and avoid unnecessary and careless spending. Good management of cash reserves will look better to an interested buyer than a business that is falling under rapidly due to poor financial management.

Showcase Your Business Model

Potential buyers will want to see a clear demonstration of how your business generates profit (or how it should). This shows off the possibilities of the business and whether there is room for positive improvements (in order to increase in revenue). It also provides clarity on emerging issues or risks that could potentially further damage the business.

Remember Intangible Assets

Oftentimes your intangible assets may not reflect on your balance sheet. Intellectual property such as trademarks and patents can be of significant value to potential buyers, so it’s important to keep these in mind while you are presenting your business to them to make it more appealing.

Distressed Business for Sale in South Africa

In conclusion, selling your distressed business may work out better for all parties involved. Buyers who have the capital to pull it out of financial turmoil may generate a massive success, while the sellers of the business will have money to start something else if they wish to.

Whether you’re looking to sell your business or to buy a distressed business, we have the platform you need! Contact us for more information.

Author: Bronwen Barnard

Director

More Sellers Knowledge Bank

Get the latest information, valuable tips and share in the professional knowledge of business experts on selling a business

Bronwen Barnard

How to Sell a Franchise Business: As a Franchisee

The decision to sell a franchise is a big one that should be planned and prepared for carefully. If you are a franchise owner currently, chances are you have put a lot of money, time, and effort into the business. It makes sense that with this investment, you want to get the best possible price when you sell. The trick is to use the right steps to ensure a successful sale and a favourable outcome!

Bronwen Barnard

Business Brokers: Traits for Success

Starting out as a business broker may seem daunting; there are many who have been in the business for countless years who have all the connections that those just starting out would truly benefit from. This is where new brokers need to pluck up the courage to speak to those with more experience, and perhaps even form relationships with financial professionals, accountants, attorneys, and other professionals related to the buying and selling game. The right connections will put the broker a step ahead.

Bronwen Barnard

How to Sell a Business without a Broker

There are many small business owners who successfully manage to sell their businesses without using a business broker. There are a few benefits of selling your business without unnecessary third parties – a major one being that the business owner can avoid the transactional fees or commission that the business broker will require from the sale.

Bronwen Barnard

Business Valuations: Benefits of Getting One

Accurate figures can help business owners determine the asking price and how much room there is for business negotiation. Potential buyers should not be chased away by unfair asking prices and negotiations that can’t be justified. Equipped with the right facts and figures, fair business negotiations can run a lot more smoothly.

Bronwen Barnard

How Do I Sell My Franchise?

Whether you’re a new franchisor, or one that has been around a few years, finding the right platform to sell on (when you’re ready to) can be tricky. Many business buyers are opting to buy a franchise rather than a standalone business, because of all the benefits and security of buying a franchise offers. Business for Sale provides an interactive online platform for those looking to buy and sell their businesses. Why would you use a business directory to sell your business? There are a few great reasons!

Bronwen Barnard

How to Negotiate the Sale of Your Business

Selling your business is a serious undertaking, and requires immense preparation and planning. Buyers want to ensure that they are getting the best possible price, while sellers are trying to achieve the same. The process that takes place between the two parties in order to settle on a figure is the negotiation. And there is a definite art to negotiating!

Bronwen Barnard

Selling a Business in a Depressed Market

When the market conditions are less than ideal (like now), you’ll probably be reluctant to sell your business. We have already provided useful tips for selling a distressed business, but selling a business in a depressed market is a whole different ballgame. There are many different ways that you can hook a serious buyer who will give you the best price, if you follow some basic best practices.

Anita du Toit

Can I Franchise my Business? – Ten Things to Consider

Many businesses get to a stage where they consider expansion, and franchising is one way of expanding a business footprint. There are many benefits to be had from franchising a business, including expansion with third party capital and the dedication of an owner manager that promotes the business for their own profit. Not all businesses have franchise potential. Any business owner considering franchising should ask themselves the following questions. Ideally, all these questions should have a positive answer.

Harry Welby-Cooke

What makes a great Business Coach?

A great ActionCOACH first and foremost has a passion for business, as well as a passion for helping others. All our successful coaches love business. They love the mechanics of business, how it works, finding ways to improve it, fixing broken pieces, breaking unhealthy old ways, learning about different types, creating new ways of doing things, and having fun in the process. For more info contact: Claudell van Eeden, claudellvaneeden@actioncoach.co.za

Bronwen Barnard

Common Mistakes to Avoid when Valuating an Online Business

Unlike other businesses, the online venture may not have any tangible assets such as property, machinery, or vehicles instead they will have Intelectual Property, websites, and systems. The company may also have an online presence and income generation as proof of its value. Your business needs to be listed at a realistic market-related price. The correct valuation is thus imperative to ensure that the online business is sold at the right price. Below are four common online business valuation mistakes to avoid.

Bronwen Barnard

Employees - The Cornerstone of any Business

Employees drive the goodwill of the business and in the case of a change in ownership represent continuity. One of the most important deciding factors for a buyer would always be: Does the staff know about the sale? Will the manager stay on in the business? How long have your staff been working for you? Taking over a business, the continuity of the staff is the most important factor, especially if the buyer is new to the industry they will be very dependent on your current staff compliment.

Bronwen Barnard

Getting It Right the First Time

Though there may be hundreds of businesses being advertised on websites “for sale”, at any given day there are only two types of businesses in the market: Those that don’t sell; and Those that sell.