You may have finally made up your mind to sell off your business, either to retire or to venture into another one. Whatever it is, you have invested lots of time, energy, and money into this business and should derive profits from its sale. But selling a business is not an easy task. A good number of entrepreneurs are known to make costly mistakes while selling off their businesses. Hence, to ensure the success of the sale as well as to preserve peace of mind, you need to follow some expert tips. Read Fusion Accountants guide to selling your small business.
Mistakes to Avoid When Selling Your Business
1. Overconfidence:
Being confident is good if you are able to negotiate the deal and get a good price. It is necessary to understand that real-world valuation is dependent on quantifiable criteria and not our personal worth estimation. This is a mistake that you should avoid. For this, you are to derive an objective third-party valuation. When identifying appropriate business valuations, you should address the issue that might result in a value increase.
2. Insufficient preparation:
The common mistake committed by many is lack of preparation. Several key aspects associated with your business should be addressed before listing it in the marketplace for sale. Sustainable profitability, financial documentation, staffing problems, lease issues along other concerns it likely to impact salability and price. ‘Right now’ is rather the perfect time to prepare to sell off your business. Brokers generally recommend their clients to start their selling preparation process a minimum of two years before getting their business listed.
3. Hands-off approach:
This is something that you should avoid in selling Your work does not end with the hiring of a broker, even an experienced one. You can expect your broker to aggressively market your business to potential clients. But it is you who possess in-depth knowledge about your business. You should immediately discuss with your broker and find out how proactively you can market your business together. If the broker manages to identify a few qualified buyers, then you need to try to motivate the buyer to purchase your business. Proper and timely interaction with potential buyers is sure to have a significant impact on their confidence and enhance sales prospects.
4. Not willing to leverage professionals:
You need to understand that you are best at managing your business and not selling a business. Hence, it becomes essential to hire brokers who can successfully expedite the selling process. Unfortunately, this is something that many business owners fail to understand. The brokers will charge a fee of 10% for their service. In several cases, they have managed to add a minimum of 10% to 12% to the overall sales price. On hiring, the broker will help manage several vital tasks. It includes preparation, exhibiting your business to all potential buyers, promoting, market as well, and engaging in negotiation. Also try to leverage the experience and expertise of other specialists like financial consultants, lawyers, accountants, etc. when deemed necessary.
5. Unable to pre-qualify buyers:
This is another area that you may avoid in selling your small business. Early prospective buyer pre-qualification is vital to ensure successful business sales. What you need to understand is that pre-qualification helps attract prospects to enter into a sale. Moreover, early pre-qualification also safeguards your company’s sensitive information. The details concerning your sale will be provided only to serious buyers. The standard requirements that prospective buyers would be interested to avail of are your company’s financial background information and confidentiality agreements.
The above are just a few of the many Mistakes to Avoid When Selling your small business. The right choice will enable you to derive profits from the sale.
