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5 Reasons Investors Won’t Commit to Buying a Bus Business

Last updated on May 7, 2012 by Sozo Staff

Most business owners know finding a buyer won’t happen overnight, yet many are surprised to discover just how difficult it can be to get an investor to commit. But consider the buyer’s point of view. Buying a business requires an enormous amount of money, energy, and time. Essentially, buyers are signing up for a new life. If you want to get buyers to commit to purchasing your bus business for sale, you’ll have to convince them that it’s the right decision.

1. They Don’t Have the Funds

These days, it can be a challenge for prospective business buyers to secure traditional bank loans. No matter how appealing your chauffeur business, buyers can’t make an offer if they don’t have the money. Now, this doesn’t mean you have to lower your price (assuming it’s based on your company’s true value). But you may have to get creative. Most successful sales these days involve some percentage of seller financing. Since buyers typically invest their own capital in the form of a down payment, there’s still plenty of incentive for them to succeed. Seller financing just helps close the gap.

2. Your Price Is Too High

Even if buyers have the means to buy your limo or bus company for sale, they won’t pull the trigger if they suspect it’s overpriced. Price isn’t a random number, but a figure based on the benefit a new owner can expect to receive from your company. It needs to be tied to value. Business buyers are often represented by a team of business brokers, attorneys, and CPAs. If the price isn’t right, they’ll quickly be advised to pass. Because value isn’t an exact science, it’s important to receive a proper business valuation before setting a price.

3. Your Records Are Messy

You wouldn’t jump head-first into a murky lake if you didn’t know how deep the water was, right? Buyers aren’t going to jump into your transportation business if they can’t clearly see what’s beneath the surface. Investors need to know what cash flow they can expect from the business. If they can’t easily see profitability, decipher expenses, or figure out if you have any outstanding debt or legal issues, buyers will steer clear.

4. The Future Is Uncertain

You don’t have to wait until the economy is booming to sell your business. But while investors will buy in a down economy, they have to believe the future will be bright. This is one of the reasons advanced preparation is so important when planning to put your bus or limo business for sale. By analyzing the structure of your company, it may be possible to increase value to certain types of buyers. Can you diversify your customer base? Can you make changes so that your company is less dependent on your involvement? Strengthening your business increases the odds that a future buyer will succeed.

5. You Don’t Know What You’re Doing

Just because you’re an expert at running your business doesn’t mean you’ll be an expert at selling it. The truth is that most buyers would rather deal with a middleman than directly with the owner. Sellers can’t help but bring their biases and emotions to the bargaining table. A limo business broker can show a business in the best possible light while remaining impartial, adding significant value. The for-sale-by-owner approach may seem like a way to save money, but if it keeps you from hooking the right buyer, it will cost you in the long run.

Filed Under: Transportation

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