I see far too many businesses close rather than accept a price lower than the owner believes it is worth (more than ZERO is way too many).
Pride is usually the culprit in these situations. Often the argument is, “we put $x into the build-out and equipment and we need to make that back”. On the surface this sounds like it makes sense, but those are sunk costs — in other words, money that was spent in the past. That works great as a psychological barrier to selling, but it is healthier to keep the costs in mind without getting too hung up on those numbers. There are many reasons why the dollar amount you put into the operation of the business would carry less value (or no value at all, or even a negative value) to a prospective buyer — wear and tear, style, operational differences, etc.
Sometimes a little perspective is needed, and there is a recent post from Penelope Trunk that provides an argument that I hadn’t thought of before — being able to say you sold your business is a great resume builder! She goes even further to say that it doesn’t really matter how much you received as a price for the business because the terms of a transaction are expected to be confidential, or at least that it is not considered strange to not disclose the terms of the sale.
This quote from her post says it best:
To be honest, you still look pretty good, compared to the rest of the world, if you say you started a company and it failed. Because the gumption and intelligence to start a company is flattering to anyone.
But you will look really good if you say you sold the company. Even if you get someone you know to buy it for a very small amount of money.
Of course it is better to sell for more, for a lot of reasons. But there is a point where you are ready to get out of your business. Maybe you’ve gotten what you consider to be a “low ball” offer (someone giving an offer much lower than they think you will accept, just on the off chance that you will go for it). Well, maybe it’s time to consider that offer more seriously. What’s more important — “winning” the negotiation OR getting out of the business without having to say that you shut it down?
All I ask is that you consider this advice when you’re making that fateful decision whether to shut the doors or to take that offer that you feel insulted all of your hard work.