The retail industry is a vast sector with numerous subcategories like clothing, food and drinks, and vehicle services. Despite the different products and services, retail businesses exhibit similarities in the selling process.

If you have plans to sell your retail store, you should prepare in advance for sale. Early preparations ensure that you have the right information you need to sell. It also prevents you from making huge mistakes that will cost you a considerable amount of money.

So, what challenges do retail owners face when selling their business? Read on for insights on these problems and how to avoid them.

1. Failure to prepare the business for sale

You cannot sell a business on an impulse. It would be best if you planned for a year or two to get the retail store ready for sale. However, many retail business owners think that they can show revenue for the past year and fetch a reasonable price.

A buyer will carry out due diligence, and they will dig into the business history and financial records. Therefore, if the performance patterns are not consistent, they will not risk investing their money. For your business to fetch a high price, you should take good care of the retail outlet from its inception. Having a succession plan from the beginning will help you to keep the business in check. That way, you will have a plan for clearing your debts, and your accounts will indicate opportunities for growth and expansion. Retailers, who run their business with a vision of selling it, usually get a lucrative price for their venture.

2. Finding the right broker

Selling a business is a complicated and lengthy process. Collaborating with a broker will help you to get offers within a short time. While brokers are crucial for a successful sale, you need to find the right person to represent your business. If you fail to vet a broker, you can waste time and money without getting the desired results.

It would be best if you took the time to interview several brokers and find the right fit. A suitable broker should have an extensive portfolio in selling retail businesses and an established network. If you pick a reliable broker, you may then have offers within a month of advertising your retail outlet.

3. Business valuation

Many retailers ask for either too much or too little. If you set an unrealistic price, your business could be on sale for years without any buyers. You cannot expect a failing business to fetch a reasonable price. On the other hand, you should not dispose of your business at a throwaway price.

You worked hard on the retail store and built a successful venture. Therefore, you should not throw away your hard-earned money because you failed to do a valuation. If you want an estimate of your business, calculate its net worth or use the return on investment to come up with a value. Analysing the market price of similar companies will also guide you in determining the market price.

4. Lack of employees to manage the business

As a business owner, you assume the management role in your business and make all the significant decisions. However, if you plan to sell your venture, ensure the business can run smoothly in your absence.

Being dispensable gives the potential buyer confidence that the company will run without problems if they buy it. Therefore, you should train employees on all aspects of the business so that they can teach the new owner during the transitioning period.

5. Failure to get the business books in order

Buyers do due diligence before making a counteroffer or closing a sales deal. They review the company’s history and go through financial records. Therefore, you should prepare the business profit and loss statements, tax returns, and balance sheets before you start looking for a buyer.

You should also have a list of assets and inventory that will not be part of the sale. Lease contracts, agreements with suppliers, and employees should also be ready and up-to-date for a smooth transition. If all the records are in order, it solidifies the sales process, and the buyer can make an offer.

Selling a retail business is challenging and marred with uncertainties, but it is not impossible. Besides, most of the challenges a retailer faces during the sale are avoidable through early preparation.

By Jo Thornley, Head of Brand and Partnerships at Dynamis. Joining in 2005 to co-ordinate PR and communications and produce editorial across all business brands. She earned her spurs managing the communications strategy and now creates and develops partnerships between BusinessesForSale.com, FranchiseSales.com and PropertySales.com and likeminded companies.

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