There can be any number of reasons why you might want to sell your business, from plans to retire, to wanting to pursue some other activity or line of work, but whatever your reason for wanting to do it, you must take time and care to ensure that the process goes smoothly and that mistakes aren’t made.
If you’re considering selling your business, try to avoid making any of the following 6 mistakes:
- Thinking your business is worth more than it is
You may have put years of work into your business and into building a vision for it, but buyers will care only about its current market value. Base your price on this, and not on what you believe your business should be worth.
- Not accounting for all variables that make up your business
For businesses who might have properties, equipment, intellectual property and other assets included in their worth, these must be separately value before being added into the total selling price. In the case of businesses providing professional services, much of their value may be found in the skillsets and experience of its staff members and managers, and if these are to be retained when the business is sold, this will need to be reflected in the selling price.
- Not basing the sale price on appraisals from individual professionals
It’s essential that you get at least two appraisals regarding the value of your business from professionals who are familiar with the particular industry your business is in. While it may be that your own price doesn’t quite match theirs, this will give you an invaluable insight into the pricing process, and may cause you to alter your final selling price. Alternatively, if their price matches yours, you can use that to help you sell your business.
- Failing to have the sale handled by a professional broker
Negotiating the sale of your own business is never a wise idea, not least because you may be too personally invested to be a truly effective negotiator. Hiring a broker who has experience with your particular type of business, and who knows what buyers are looking for, will help you handle the sale without any emotional involvement.
- Not working with the buyer for a smoother sell
It’s important that you take the time to inform your managers and other key staff members who may be remaining with the business, of what is going on and what is expected of them, along with helping to allay any concerns that they may have. The minute any discontent is present either among the employees or the buyer, revenue could be reduced, sale payments could be withheld and at the worst, litigation could take place.
- Not being willing to help in the financing of the sale
The sale price of your business is always going to be limited to what cash the buyer has and their ability to get financing, if you’re not willing to help in the financing of the sale. You could significantly limit how many potential buyers there are, and even limit your proceeds of the sale.
Whatever your reason for wanting to sell your business, it’s vital that you put a formal plan in place and take every step necessary to facilitate a smooth sale. If you’re struggling to do this, simply reach out to a business management firm, who will impart their invaluable wisdom, and ultimately, help you sell your business for what it’s truly worth.