 4f) Confidentiality We have briefly highlighted that the confidentiality of selling your business is important throughout the whole process. If people find out that your business is for sale, some will have a negative response where some (mainly your competitors) will take advantage effecting your chances of selling. You will have to come clean at some time but you will know when it is the right time to do so, preferably when your business has entered the final stages of the selling process. By looking at the different effects on different people, you will understand why confidentiality is necessary. Employees If employees are told that the business is up for sale, it is more than likely that they will feel insecure about their future and consequently seek alternative employment. This may result from their fear that new management will create redundancies or job cuts. If any key members of staff left the business after hearing the news, it may have a serious effect on the performance of your business. Consequently, it will reduce the chance of selling your business significantly should performance cripple.
Likewise, if key members of staff were identified by the potential buyer only to realize that they had recently left the business, it may reduce their interest in proceeding with the sale. Suppliers Your relations with suppliers may take a turn for the worse if they are aware of your plans to sell the business. If you currently purchase supplies on credit, they may reconsider your position and demand cash on delivery, which may certainly have an effect on your immediate cash flow. Further, they may feel that your decision to sell is based around financial difficulties and therefore place you on the credit black list. If you have been a good creditor in the past, they may overlook this action. Customers If customers catch onto the news, they may decide to trade elsewhere unaware of what will happen to the business in the future. Again, the knock on effect would create less sales and profit reducing the interest of the buyer. Banks Banks are very cautious of small businesses because of their risky nature and so it is no surprise to how they would react when they find out that yours is for sale. They may decide to put a halt on further borrowings and any overdraft facilities, or even worse, put out a call to recover any outstanding debt by increasing repayment amounts in shorter periods. Competitors How would you react to news of your competitor putting their business on the market? Very positively I suppose. This is exactly how they will react should they discover that you are selling your business and consequently take action that will affect your sales and customer confidence. Competitors will break their back to make it known that you are selling so they can lap up the insecurity of your customers. Similarly, look what happened when a leading Bank announced their feelings and attitudes towards small businesses: competitors jumped at the chance to offer their services to small businesses as soon as the next day!
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