forbes.com
Three Ways Small Business Owners Sabotage Their Sale
Small business owners often lose buyers due to broken trust during negotiations, not financial issues; this article details three behaviors that scare off buyers and offers solutions.
- How do these behaviors undermine trust and impact the valuation of a small business?
- These behaviors create uncertainty and risk for buyers. A slow, unprofessional process suggests higher risk and potential problems. Changing terms at the last minute signals unreliability and potential hidden issues, impacting perceived value. Secrecy hides crucial information, causing buyers to undervalue or walk away completely.
- What are the three most common behaviors that cause small business owners to lose potential buyers?
- The three behaviors are: 1. Going solo without experienced help, leading to a slow, unprofessional process. 2. Moving the goalposts at the finish line, breaking trust and signaling unreliability. 3. Extreme secrecy that locks out key staff, hindering buyer confidence in the business's operations and future.
- What steps can business owners take to build trust with buyers and successfully navigate the selling process?
- Owners should build a professional team (M&A advisor, deal-fluent accountant, experienced lawyer), establish clear deal terms early and stick to them, and strategically involve key staff in due diligence to showcase the business's strength and ensure a smooth transition.
Cognitive Concepts
Framing Bias
The article frames the process of selling a small business as a trust-based negotiation, emphasizing the importance of maintaining trust with potential buyers to secure a successful deal. The introduction highlights the common pitfalls of losing deals due to broken trust, immediately establishing the central theme. Subheadings clearly outline the three main behavioral red flags, creating a structured and easily digestible narrative that supports the article's main argument. This framing effectively guides the reader towards the importance of trust in business sales.
Language Bias
The language used is generally neutral and objective, although terms like "scare off" and "brinksmanship" might carry slightly negative connotations. However, these are used descriptively within the context of outlining problematic seller behaviors, rather than expressing a judgmental tone. The article maintains a helpful and instructive tone throughout.
Bias by Omission
While the article focuses on the seller's perspective, it could benefit from including insights from the buyer's point of view to provide a more balanced perspective. The article does not delve into the ethical considerations of buyers or discuss situations where buyers may act unethically. The omission of these aspects might create an incomplete understanding of the negotiation dynamics.
False Dichotomy
The article presents a somewhat simplified view of the process, focusing heavily on the seller's actions and their impact on trust. It does not fully explore the complexities that might arise from buyer behavior or market conditions. While it acknowledges that the seller's actions are within their control, it overlooks external factors that might impact the success of the deal.
Sustainable Development Goals
The article directly addresses the sale of small businesses, a key aspect of economic growth and job creation. A successful sale ensures the continuation of the business, preserving jobs and contributing to economic activity. The advice given helps facilitate smoother transitions, minimizing disruption and maximizing the chances of a positive outcome for employees and the economy.