You have worked incredibly hard on your business and nurtured it over the years. So when it comes to selling your business, you want the best possible deal, and one that credits all of the work you have ploughed in over the years. Plus, you want the process to be as fluid and stress free as possible.
When it comes to selling your business, there are so many challenges that you will have to face and overcome that can cause a lot of stress and perhaps incur a loss of value on a business sale – but to try to make it less challenging, we are offering our expert views on some of the most common mistakes that should be avoided.
All being well, our experience will help you get the best possible deal for your pride and joy and allow for the process to be as stress free and smooth as you deserve.
Failing to package your business, and failure to prepare
When it comes to selling your business; looks are everything.
And by that, we don’t mean to tidy up your offices or property and baking fresh cookies for when people take a look around. Sure, those things will give a very good impression (and your staff will love you for it too!), but we are talking about the finer details of your business.
Tidying up, and streamlining your documents and finances can help to make all of the difference and allows you the chance to present your business in the best possible light. Potential buyers don’t want to spend hours looking through financial records dating back twenty years, nor do they want to sift through paperwork that simply is not relevant.
A confidential business review (CBR) is readied to educate your prospective buyers and all of your information once tidied up will certainly help this process.
Timing the Sale Too Late
Timing is everything, and at times timing the sale of a business is a very tough ask. Many people decide to sell when the business is dwindling, when a partnership has turned sour, or when they have simply had enough.
Which are all fine and valid reasons, but many of these reasons for sale can devalue the business.
The best time to sell is when business is going well, when you don’t have to sell and before any emergencies occur. The better the business is going, the higher a fee your business will be valued at.
Failing to Price the Business correctly
It is common for businesses to be either overpriced, or underpriced.
It is easy to value your business with all of the positive emotions of it being your ‘baby’, and that feeling of attachment – which can make business owners think that their business is worth a small fortune. And on the flip side, you would hate to know after a sale that your buyer was willing to pay an extra 20% on top of the valuation!
Be sure to use a business broker whom can help you identify the appropriate asking fee for the business.
Not Bringing in Professionals
Sure, you know your business inside and out, and to make it a success you most possibly will have negotiated the best deals and sold your services to the best of your abilities.
But that doesn’t mean you are an expert at selling your business!
The professionals are there for a reason; to help you sell for the best price, and make the process as easy as possible.
Find the best possible attorney and business broker and include them as one of your team.
Speaking Out About the Sale
Whilst the sale is ongoing, you need to ensure it is ‘business as normal’ and your sales continue to come through.
If word got out about the business selling, your clients and customers could go elsewhere. As too could your employees.
Buyers want to buy a successful, operational business so be sure to create confidentiality agreements and stick to them.
When selling your business, there is a lot of pressure on you to maintain focus and to engage your role as the business seller. If you happen to interact with your buyer be sure to remain positive and help them to be confident about the transaction and the business.
If the buyer can get a good vibe from you, they will have a better time of seeing themselves at the helm of the business.
Watch Out for Time Wasters
If you are fortunate, you will get a lot of interest in your business from prospective buyers all of whom want your time, the businesses time and possibly your business brokers time too. Be sure to not spend the time on non – qualified leads!
A good business broker will be able to identify potential buyers whom are not financially qualified and not fully committed to buying which will free up a lot of time for those who do want to buy your business.
When selling a business, it can be very easy to get distracted over thoughts about the future. You could perhaps be thinking about your next steps and be so excited about the future that you take your foot off the pedal and forget to properly manage your business.
The sale is only a done deal when everything is finalized.
So in the interim, continue to manage your business and keep it profitable to ensure that the sale still goes through.
Forgetting About Financials
It is very rare for a buyer to come along and pay cash for a business. The likelihood of your buyer relying on you for seller financing is very high.
Your business broker will have good finance contacts who can help your business become pre-qualified and leave you with a strong marketing advantage.
Forgetting to Negotiate
Your skills as a negotiator will be vital right up until the very last moments. You must always be willing to be prepared to listen to your professionals and negotiate where necessary.
Failure to negotiate or procrastinating on a decision can prove a very costly mistake further down the line.