Can You Sell a Business That Is Losing Money?

Yes, you can sell a business that is losing money.

But the process, the buyer pool and the likely outcome are very different from selling a profitable operation. The key is approaching it commercially, not emotionally.

Loss-making businesses do change hands in Australia across retail, hospitality, manufacturing and service sectors. The issue is not whether it can be sold. The issue is how it needs to be positioned — and at what price.

1. Not All Losses Are the Same

The first question a buyer will ask is simple: Why is it losing money?

There is a significant difference between a business that is structurally unviable and one that has been poorly managed or temporarily disrupted. Rising wages, increased rent, owner burnout, pricing mistakes or operational inefficiencies can all be corrected. Declining demand or a broken business model is harder to fix.

If the losses are explainable and correctable, you have a stronger story to take to market. If the business has been in steady decline for several years with no clear turnaround path, buyers will see that risk immediately.

Clarity about the cause of underperformance is essential before listing the business.

2. Who Actually Buys a Struggling Business?

Traditional bank-funded buyers are unlikely to secure finance for a business that cannot demonstrate consistent earnings. That shifts the buyer profile.

Most purchasers of loss-making businesses fall into one of three categories. They are experienced operators who believe they can turn the business around. They are competitors seeking strategic value, such as location or customer base. Or they are buyers interested in assets rather than goodwill.

These buyers are commercially focused. They do not buy based on past performance or sentiment. They assess risk, negotiate firmly and structure deals to protect themselves.

3. Valuation Changes When Profit Disappears

When a business is profitable, valuation is typically based on a multiple of earnings. When profits disappear, that framework no longer applies.

Instead, pricing may be based on asset value, stock, plant and equipment, location strength or brand recognition. In many cases, goodwill is limited or non-existent.

One of the biggest mistakes struggling business owners make is anchoring their expectations to what the business "used to be worth". Buyers will pay for current performance and realistic future potential, not historical highs.

Pricing realistically increases the likelihood of a clean exit. Overpricing usually leads to a prolonged, stressful campaign with little genuine interest.

4. The Lease Transference

For businesses operating from leased premises, the lease is often more important than the trading result.

If there are several years remaining on a lease with personal guarantees in place, selling the business may be the most practical way to limit ongoing exposure. Assigning the lease to a new operator can remove significant personal risk.

However, if rent is above market or the lease term is short, buyers will factor that into negotiations. In some cases, landlord discussions are required before the business can be sold at all.

5. Should You Stabilise Before Selling?

Where possible, even modest stabilisation can improve outcome.

Reducing costs, adjusting staffing, renegotiating suppliers or correcting pricing can move a business from consistent losses to break-even. Even that shift can make the business more attractive to turnaround buyers.

A business that shows signs of correction is easier to position than one in ongoing decline. However, this depends on available cash flow and personal circumstances. Continuing to absorb losses simply to "improve optics" is not always sensible. Each situation needs to be assessed on its own merits.

6. Be Clear About Your Objective

In distressed situations, the goal is rarely maximising price. It is usually limiting further loss and protecting personal assets.

Waiting too long can reduce options. Mounting debt, unpaid tax obligations and strained supplier relationships make negotiations more difficult over time.

A structured, realistic approach allows you to assess whether a going-concern sale is viable or whether alternative exit strategies are required.

7. A Commercial Exit Strategy

Selling a loss-making business requires honest positioning and disciplined negotiation. Buyers expect transparency. Clear financial records, realistic pricing and a logical explanation of the business's challenges create credibility.

At SBX Business Brokers, we work with owners facing difficult circumstances to evaluate options properly. Whether that involves restructuring before sale, targeting strategic buyers or exploring alternative exit pathways, the focus is always on protecting your position and reducing ongoing exposure.

If your business is losing money and you're unsure what the next step should be, contact SBX Business Brokers for a confidential discussion. Early advice can preserve options that may disappear if action is delayed.