The #1 Mistake to Avoid When Selling Your Business

stages of business Sep 15, 2023

Sound advice is timeless and holds true in the changing landscape of the restoration market. I spend hundreds of hours each year speaking with restoration owners like you who call RBA ready to sell their business. I answer questions about selling and preparing businesses to sell, and often the answers to those questions change subtly as our market evolves. But there is one piece of advice that has remained the same throughout my 15+ years transacting restoration deals of all sizes.

The #1 Mistake business owners make when selling their restoration businesses is holding onto the business too long. 

Business growth happens in stages, and all businesses and owners go through them. This is true across every industry.

Over time, the business will start to grow and usually, around eight to ten years in, the business begins to plateau. Further growth requires change of some sort. If, after that ten-year mark, you're not motivated to  change and retool your business to get to the next level, revenues start to decline; profits start to decline. You business cannot stay in a plateau state - it will either see up or down movement. Your decisions and action make the difference.

5% of the folks that I speak to sell their businesses when it's on an incline - when revenue is increasing and profit margins are growing. That's when you're getting the most valuation for your money. The right buyers pay good money for a business that's growing. 

15% of the calls I take are from folks in a plateau who have been running about the same for the past four to five years. Sellers want out - they're ready. And that's ok. There are still good offers to be had. 

The other 80% of the calls I take happen when the business has started to decline. Owners are calling us as they hold onto a business that will not get them what they need to fulfill the future they want. We call this unsellable. It's burnt out. It's declining. They've lost an opportunity to create the best next step for themselves, and they're stuck in a declining business. 

It's easy to wait, to fall into this unsellable space and make that #1 mistake that you want to avoid when selling your business. If you're thinking of exiting, consider what stage your business is at. Is it growing? Are you in a plateau where profit and revenue have remained constant the last four to five years? This is the time to act, to start those meaningful conversations that point toward the future you've been building toward. 




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About Gokul Padmanabhan

Gokul has spent his entire career as a small business owner like you. He learned a lot throughout the process of starting, growing, and selling several businesses. One important lesson: most business brokers didn't add much value to the process of selling his businesses because they didn't understand them.

So, he became a business broker and immediately learned another important lesson:Ā to really understand the businesses you sell you need to specialize in a single market.

So, he specialized in selling restoration businesses, and so was born Restoration Brokers of America.

After more than 15 yearsĀ  of evaluating and selling restoration businesses, RBA has learned another important lesson: most businesses we see can be worth hundreds of thousands of dollars and, sometimes millions, more if the owner will manage his or her business a bit differently as they prepare to sell.

We call this Managing for Value. It's not complicated. It's not difficult. It's just different.


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