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Every year millions of Americans pursue a key opportunity found in “the American Dream.” That is, owning their own business. U.S. Census Bureau data shows that over 5 million new businesses were started in 2022. That is higher than the past five-year average of 4.4 million new businesses per year, driven up by the COVID-19 pandemic aftermath. At the same time, the Bureau of Labor Statistics reveals that about 20 percent of new businesses close within a year and about 65 percent of new businesses don’t make it to their 10th anniversary. It can be said that starting your own business can be a thrill, closing a failing business can be depressing, and otherwise, selling your business can become a necessity, depending on the timing and circumstances. When it comes time, confidentiality when selling your business is key.  

Why Do Small Business Owners Sell Their Business 

Selling your business can be driven by many factors. A business owner may seek to find a better opportunity; one that is more attractive personally or professionally, or one that is more profitable. A sale can become necessary due to bankruptcy or financial pressures. Indeed, one-third of small business owners reported that “lack of capital” was the primary reason for closing their business. Boredom or burnout can influence owners to sell. Strong competition and economic factors may be reasons to close shop. A death or disability of an owner, spouse, or key partner can prompt a sale. Similarly, a divorce can instigate a sale. Partnership disputes can result in selling your business. Relocation and retirement are certainly reasons to sell. And an unsolicited offer can prompt a sale. 

The Importance of Confidentiality When Selling Your Business 

Selling your business is often a complex and sensitive process requiring careful planning and solid execution. Keeping the sale confidential is one of the most critical aspects in selling your business. The following are reasons to maintain confidentiality:

  • Maintaining employee morale. You don’t want employees to spread rumors and speculate about their future while the sale is in the works because that can cause poor performance, poor customer service, and result in early and unwanted attrition.
  • Preserve a loyal customer/client base to maintain the value of your business.
  • Keep competitors from finding out so that they don’t develop strategies for stealing your customers and employees away from you or squashing your business by creating doubts and speculations. You also want to maintain your competitive advantages and protect your market position.
  • Keep vendors from becoming suspicious or anxious, thus impairing their services, increasing their prices, and altering their payment terms.
  • Confidentiality is critical to achieving legal compliance, thus, avoiding any legal repercussions and financial penalties.
  • Keeping a sales deal confidential helps prevent price changes so that the sale remains financially viable.
  • Confidentiality is critical to protect sensitive information. 
  • Confidentiality helps maintain negotiation leverage so that seller and buyer negotiate from their positions of strength, unhindered by outside disruptions and “noise” that might influence the sale improperly. 

Tips for Keeping a Business Sale Confidential 

Follow these tips when selling your business to protect confidentiality and protect your business interests: 

  1. Limit the number of people who know about the prospective sale. 
  2. Carefully restrict access to sensitive information, especially online information. Know how much information to provide and when to provide it. 
  3. Monitor employee communication to prevent leaks or accidental disclosures. 
  4. Carefully qualify prospective buyers. Do they have experience in your industry? Do they have adequate financing? What are the goals of the prospective buyers? How serious are they in buying your business?  
  5. Use a robust confidentiality agreement. 
  6. Use the services of a strong and reliable business advisor. 

Seek Professional Business Coaching and Advisory Assistance 

Contact Blue Diamond Consultants, doing business nationwide to get your home service business set up for a profitable sale. Our coaching services are based on extensive experience through previous success for home service provider businesses.