There are a number of mistakes sellers tend to make when putting their hospitality business up for sale. Unfortunately, many sellers learn these mistakes the hard way (and then never again!!). We asked our Redmako Business Sales team what mistakes they commonly see from sellers. Here are the 5 biggest mistakes sellers of hospitality businesses make, which ultimately affect the end amount they receive from the sale of their business.
- Letting the lease run low or out – this means there is no security for a potential buyer (and therefore the business is ‘high risk’ and not worth as much). In fact, sellers will not only receive low offers, but low interest from potential buyers too.
- Not having quality verifiable financial records (i.e. from a certified accountant). This makes it difficult to substantiate any asking price and can make it harder to sell. If your buyer gets to contract stage, your financials will be inspected by the buyer’s accountant. If something doesn’t match up, the contract can be broken thanks to the Due Diligence clause.
- Assuming that saving on Broker Fees will be a direct reflection on how much the seller keeps in their hand at the end of the sale. It simply doesn’t work like that! Brokers can do a number of things – from saving you money and/or time, and saving you from making costly mistakes, to helping sell your business for more money. Never assume a broker is doing an easy job – they’ve got years of experience and know the best and quickest ways to do all the intricacies that you haven’t even thought about yet.
- Not telling employees you are selling the business. We’ve talked about this before. Owners assume selling the business is a bad thing for employees – this is not the case. It is common practice for the new owner to want to ensure (in the contract!) that all employees stay. Your employees are so valuable to potential buyers. In fact, your employees might have more opportunities with the new owners. If that’s not security, we don’t know what is. It’s much better for your employees to hear this from you, rather than through gossip and hence assume the worst.
- Not selling with a specialist. In other words, selling it on your own, or through a general business broker or real estate. A generalist who doesn’t specialise in hospitality will try to sell your business the same way as the hair salon and news agency down the road, when a very different approach is needed. And attempting to sell the business yourself is similar – only someone with extensive experience selling hospitality businesses can do this the best.Only consider brokers who sell 100% businesses in your industry, nothing less.
Redmako Business Sales specialises in 100% hospitality, 100% of the time. If you’d like to find out more about what’s involved in selling your hospitality business, give our team a call on 1300 857 806.