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!
12 March 2021
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!
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.
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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!
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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.
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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, email@example.com
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.
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.
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.
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