I’ve stopped counting the number of new business owners that tell me they want to sell their business.
When I ask them why, they say it’s not working out as they thought it would. I usually ask a few more questions for clarification to see if it is something that is fixable.
When I ask them how much they want to sell if for, they give me number rather quickly….then I ask them how they arrived at that figure…..they say that is what they owe the bank.
After a short discussion about what they owe not having any correlation to what it is worth we start talking about the way businesses like their’s are valued.
This whole thing saddens me because most of these people should have never been put in a position to start a business.
How did it happen?
They worked hard, accumulated a little wealth, equity in their homes and a good credit score………..a lender’s dream.
Banks are in the business to loan money and when they have someone that wants to borrow money and they meet lending criteria and the loan can be secured….they may find themselves in business. It’s not the banks business to get into their head.
The American Dream for some becomes a nightmare…..they have personally guaranteed their commercial loan, put their home at risk by allowing the bank to have a secured interest and often personally signed for a long term commercial lease. Many people I talk to are making less than they would in fast food just to keep from losing their home and ruining their credit.
Sometimes I do volunteer mentoring and some agencies send their clients to me for reality checks…….last person that I mentored was totally qualified and pumped…..a little shell shocked when he left my office. Gave him that soul searching meeting…..due diligence items to attend to and a promise that he would sit down with his wife and tell her the reasons why he wanted to go into business, all the things he had done to make sure this is what he wanted to do, that they would be risking everything and was she on board 110%….I told him if she wasn’t that when the going got tough, and it would, his marriage would likely become strained too….maybe to the point of breaking.
I think he will be a great business owner and will be successful but he is bucking some strong headwinds and odds and I wanted him to know that before he got in so deep he couldn’t turn back.
Richard Roberts, ABI is the Senior Managing Broker at AEGIS Business Brokers, LLC and holds an Accredited Business Intermediary classification by the American Business Brokers Association and is a member of the International Business Brokers Association, International Franchise Professionals Group, Chambers of Commerce, Committees and Volunteer Organizations. Contact Richard at 479.689.4455 or firstname.lastname@example.org.