Quality Control – The Importance of Maintaining Normality Whilst Selling a Business

In my experience, most people have come to the decision to sell their business because they or the business that they are running has reached a point where it is no longer viable for them to be involved. Now these reasons can be completely acceptable and in many cases, unfortunate but as a seller what is vitally important once your business goes on the market for sale is the continuation of service quality, efficiency and profitability.

I have lost count how many times I have come across businesses that are on the market for sale and at this exact point, the owners literally give up. Big mistake! If you are serious about selling your business, you have to ensure that it maintains the exact same levels of commitment, passion and drive from the vendors as if it were the day they started running the business themselves. In some cases, this is not easy and in many not possible. But let me give you a couple of comparable stories of real life business sales, one in particular that one business owner made that really has no excuse and simply leads to disappointment and lost potential capital on the final sale price. And these are true bonafide stories…

The Barbers (Men’s Hairdressers)

For years, a chap across the street from my wife’s business ran a relatively successful mens barber shop. He had a fair amount of regular customers and his busiest day of the week was always a Saturday. His shop was pretty small. Just about large enough to hold two seats so that two barbers could work and cut hair at any given time. It wasn’t the prettiest of buildings and could have done with some TLC however, his USB was that his haircuts were cheap – I mean very cheap!

Over the years, the U.K climate took it’s toll on the building and it started to look tired. Add to this the market crash of 2008/2009 and you have a business that suddenly started heading south rather sharply. As I occasionally observed the business across the street with less and less customers, I started to wonder if the owner was going to take some action to attract new customers and get the business back on it’s feet. Maybe a revamp of the interior and exterior? Possibly a new name or rebrand of the shop signage? No.

Nothing happened at all and not too many weeks later, it dawned on me that something had changed. Suddenly the owner would turn up late every morning. I mean very late. Sometimes hours. In fact, some days he wouldn’t even open the business at all and would simply leave a hand written note stuck in the window saying “Sorry, we’re closed today”. On some days, there wouldn’t even be a note and many regular customers would be seen approaching the barbers expecting them to be open, only to see a blackened out shop and no explanation. They weren’t impressed. It goes without saying that this is a sad situation.

I soon learned over the grapevine that the business was up for sale. As you can imagine this raised an eyebrow or two seeing that the business hardly ever operated and was in decline. My immediate reaction was that if the owner wants to sell the business then surely he needs to ensure it continues to trade and is actually worth something? Not in this case. However, this response is so common.

So many business owners wake up one morning and decide that enough is enough. They believe that there is someone out there stupid enough to part with a large sum of money to buy a business from someone who no longer cares anymore. I know in this gentlemen’s case that he was simply being negligent and that he didn’t have any personal issues preventing him from continuing to trade. It was simply down to laziness and a lack of care. What a shame.

In the space of a few crazy weeks, a business owner had allowed their sole source of income to decline into a shambles, decrease in value and lose any of its saleability to a new potential suitor. All those years of hard work invested in the business had been discarded in a few moments of madness. Incidentally, it took him almost a year to sell and and the price achieved was apparently 50% of the asking price due to desperation and a lack of offers.

Now, it is once again a highly successful barbers being ran by a young, enthusiastic hairdresser who has managed to maintain all the previous clients and gain new business as well. So who was the winner in this situation? Certainly not the business seller! Now onto my next example…

The Fish and Chip Shop

Only a few doors down from the barbers on the exact same street, was a long established Fish Bar that had a modest amount of custom but wasn’t overwhelmed with business. It ticked over quite nicely but it never really fulfilled its true potential. On the plus side, the food was pretty good, the prices were reasonable but the place was old, yellowing and was in desperate need of a makeover.

The owners had been running it for years. You could see they were tired. They worked hard, all hours of the day and they were soon due to retire. It was the least they deserved. They made no real secret of their desire to sell the business and planned a nice new life in Portugal – all they had to do was sell the business and get the money in the bank. Then they would be on the first flight to Lisbon.

On one of my occasional visits to the Fish Bar I walked in and noticed that everything had changed. The whole place had been redecorated with new exterior signage, fresh paint, new tiling – even the fryers looked new. Everything was new except one thing – it was still the same owners. I was impressed and strangely enough I found myself going there more often to buy fish and chips and it didn’t escape my notice that many more customers starting going there.

A few months later I decided to go again but this time the Fish Bar was closed! The windows were blacked out and there was a sign in the window stating “Under New Ownership. Sorry we are undoing refurbishment and will be reopening very soon!”. I was so impressed and so pleased for them. They has made the sale and weeks later having bumped into the previous owners on the street, met a happy and much wealthier couple. They achieved very close to their asking price and were soon due to fly out to Europe to start the new lives. The entire sales process took only a matter of months. Great news.

And the reasons for their success were clear. They had continued to make every effort to not only keep the business afloat, but had in actual fact invested their own money in the improvement of the business to make it more attractive to any potential buyers. Their commitment and passion had resulted in a quicker sale and they got back every penny they put into the business to make it more sellable and attractive to buyers on the marketplace.

Yet the comparables are staggering. Both businesses operated on the exact same street; literally four doors away from each other. In my view the Barber’s was potentially more profitable and could have sold for more money but it didn’t. The Fish Bar sold far quicker and for more capital.

It doesn’t take a genius to quickly realise that a business is not just the bricks and mortar, or the previous years accounts or the product on offer. It’s about the people who run and work at the business. It’s about the drive and passion displayed. And it’s about the commitment. Without these key ingredients, any seller will no doubt struggle to achieve a timely or profitable sale.

So if you’re business is about to go onto the market or is already up for sale, ask yourself if you are still giving 100% commitment to the business? Are you receiving muted interest or offers that you consider derisory? It’s a harsh reality but maybe you need to ask yourself why and what needs to change. Any business can sell but it’s entirely up to you as the present owner, how easily or quickly that can be achieved.

Good luck with your sale.