Learning how to sell a business successfully takes years of experience and education. It is a complex transaction that should not be approached without proper preparation. While there is a lot more to selling a business than just these, here are the top six mistakes that rookies frequently make—and that you need to make sure to avoid.
Setting a Price Too Quickly
The price you choose when listing your business has an enormous impact on the final selling price. Take your time to get a proper evaluation of the business from a proven expert. Check with an attorney, your accountant, a financial advisor, or a business valuation specialist (you can get more than one valuation!) to ensure you know the accurate price to start at. Remember, you can always negotiate down, but you are going to have a hard time raising the price once it’s known.
Selling a Business Too Quickly
Unless there is a dire reason for you to rid yourself of your business quickly, you should always take the time to explore every option available to you. That is the only way to know if you are truly getting the best price and most fair value for your business.
Not Increasing Business Value
If time is not a factor, take the steps necessary to increase the value of a business before you put it on the market. Pushing hard to improve the metrics, making building improvements, and improving sales, amongst other things, will all help you get a higher valuation when the time comes.
Not Identifying the Right Buyer
You don’t have time to waste on people who are not serious buyers. Make sure that you are only discussing in-depth details with a buyer who is pre-qualified and appears ready to make an offer. Not only do you want to preserve your time, you also don’t want to give away any of your private data to someone who doesn’t need to know it.
Failing to Negotiate
You surely know by now that you should never accept the first offer you receive. People go into buying a business expecting to negotiate. Hold firm to what you deserve but be flexible enough to not lose the only buyer you have. However, if you have several offers, you may not need to negotiate.
Not Working with a Business Broker
Selling a business is complex, and if you make a wrong decision, you could cost yourself hundreds of thousands of dollars. To help you navigate the process, you should opt for selling your business with a business broker. They have the experience and knowhow to help you avoid these mistakes and the many others that exist. Yes, it will cost you a commission, but since the expert will be able to help you get a higher sale price, you will still come out ahead.
When you are in the market to sell your business, do your due diligence, put the time into the preparation stage, and consult as many experts as it takes for you to feel comfortable with the process. In the end, when you sell your business for more than you could have imagined, you will be glad you did.