Why Half of Small Businesses Don’t Sell

When you hear more than half of small businesses listed ever sell, it’s only half the story…

There is no shortage of business buyers in the market but owners will still miss out on selling.

Why are there so many listings that don’t sell?

Poor financial management.

Many unsold businesses have owners who wait until their accountant does the taxes to find out how the business performed.

They manage the business based on the bank account balance. No monthly financials, no bookkeeping process, nothing.

The owner runs the business without financials for years and is too burnt out to wait any longer. They list hoping for a miracle.

Buyers have no view into the current performance and the bank won’t loan without some view into the current year. So buyers walk away.

But here’s what most brokers know - the well organized businesses almost always sell.

Where do owners start getting organized?

Tracking income and expenses.

You must adopt a process to track monthly financials and be able to generate a P&L at the end of every month. This is the bare minimum.

You can outsource this process but I think it’s a mistake. It’s vital for an owner to learn how to prepare and read a P&L.

This is the foundation. Start here to build your financial reporting and understanding.

I use QuickBooks but there are numerous options and thousands of YouTube videos walking you through how to use every bookkeeping system out there.

The best part is the better you understand the financials, the better decisions you’ll make as a business owner.

Let me know what you think are the best bookkeeping systems for small businesses.