Are you planning on selling your business soon? Then you must know that it can be a very stressful time for you both physically and emotionally. Regardless of your reason, there are a number of things you should avoid when you decide to sell a business.
Not making the necessary preparations
If you think buying and building a business is a complicated transaction, you’ll learn soon enough how selling a business is just the same, more or less. As an owner, a concise plan and an exit strategy is a must and should be prepared 1-3 years before you try to sell a business. Necessary files and reports are to be filed and organised especially financial reports. Concerns like issues regarding finance, employees, sustainable profitability and the like can significantly affect the sale-ability and price of your business.
Failure to hire an expert business broker and other professionals
Sure, you could be a successful owner who was able to build your company all the way to the top. It’s one thing to sell products and services to a customer, but that doesn’t make you an expert in marketing your business. It’s a long and tiring process. With the help of a group of professionals like business brokers, accountants, financial experts and lawyers, you’ll have a better chance of making the transition smoother, faster and less stressful.
Getting intimidated with the brokerage fee
If you think you’re saving money by not hiring a broker to sell the company for you, you could be right or wrong. Sure, you can save up to more or less 10% on fees, but is it worth it? Just think about this – you pay a professional for an expert service to make sure you do not miss any preparation needed. He does the dirty work for you like posting the company up for sale, makes negotiations, shows off how great your business is to potential customers and the like. But did you know that they are also capable of setting up the price for at least 10%?
Being passive while selling your business
So, you’ve already hired a group of professionals to help you in the sales process. Now, you can sit back, relax and focus on your business while letting them deal with it, right? It is another mistake owners must avoid doing. You as an owner knows the business inside and out. Only you and a group of trusted staffs and partners can answer all potential questions your buyers will ask. Business brokers will help you find buyers, make the necessary preparations and assist with negotiating. However, it is your job as an owner to face buyers with a game face on and convince them to buy your company.
Lack of confidentiality
If word comes out that a company is being sold, chances are chaos may erupt. Staffs and employees may resign from their posts or fear they can lose their jobs because of the new management. Your contacts and suppliers may pull-out and hold their deal back. It can also cause customers to turn their backs and look for other companies to do their business and buy goods and services elsewhere. The last thing you need is a company falling apart because of the lack of confidentiality. The worst case scenario will be you have no partners, customers and loyal staffs who are vital employees left to keep it up.
Not knowing your company’s actual value
Many sellers try to sell a business without assessing how much is the value of their business. Another thing is that they have no idea how much they need to move after sealing the deal. Chances are, you could very well sell the company and be underpaid, or never get to make the deal at all. Buyers are smart enough to know how much a company is worth, and won’t be paying on something overpriced. There will also be some who will take the chance to buy a company worth a lot more than the listed price.
Structuring a deal that is not in your favor
Buyers will do anything to get what they want and care less about what works in your favor. There are things you can to ensure that you can preserve the maximum value. First, don’t take anything a buyer says personally. It may be your business, but this is business deal. Never agree on a buyer’s proposal too quickly. Ask a set of expert advisers before you decide on something. Never neglect your employees, customers, suppliers and your business while making the deal. Spending too much time negotiating can take all your essential time that you need to keep your business up and running.
A business is not something you can sell in an instant. It’s a great thing that you trust your business and are confident you can see it sell fast and at a high price. However, the amount you think that your business is worth can be different from the estimate of a professional buyer and broker. There are quantifiable criteria you need to consider. By hiring a professional from a third party to do this for you, you can successfully identify your company’s proper evaluation.
Selling your company to the wrong buyers
If you think you should only sell a business to local buyers, then you should know that marketplace nowadays is global. If you only provide services locally, that doesn’t mean your buyer should be limited to locals too. Also, thinking about handing your business over to a family member, friend, a customer, supplier or even the competitor may not be the best idea. These people may not be financially capable of buying your business or may not also be qualified to do so. Knowing which the best buyers will make the sale a successful one.
The items listed above are common mistakes made by sellers. By knowing what to do and what to avoid, you’ll have better chances of making the process more convenient and less stressful on your part. Make the better choice of hiring someone to guide and help you along the way and be able to sell a business in confidence.
I started putting up my own business at the age of 21, just a simple online buy and sell. Now after 3 years. I was able to open a mini grocer in Queen. I would love to share my experience within the industry, to become an inspiration to those young entrepreneurs. I also love food and traveling.