Making the decision to sell your business is a momentous event in your life. You’ve put in years of hard work and now you’re getting ready to enjoy the fruits of that labor. However, you need to tread cautiously while selling your business. The process can be very complex and you could easily miss out on much of the value that you deserve to receive.
That’s why we’ve put together the following article. It highlights some of the most common mistakes people make when selling a business. Keep reading to make sure that you don’t fall victim to any of the following oversights while selling your company.
5 common mistakes people make when selling a business
Failing to prepare adequately
Preparation is everything in life and when selling a company. Many business owners would like to sell their company “as-is”, warts and all. But a buyer is not going to pay as much for a business with outstanding issues as they will for one that’s a well-oiled machine.
That’s why it’s important to take care of any lingering issues that your company might have before you sell. Be sure to fix any leasing issues, staffing problems, and other concerns that would be a problem a buyer would need to deal with...all of those issues will impact your company’s value in the marketplace.
Likewise, you should make sure that you have strong financial documentation, such as reviewed or audited financials, and attainable projections in place before selling.
Being overconfident while negotiating a deal
We all would like to believe that our business is the best in its class. There’s always room for confidence when selling a business. But overconfidence can be dangerous.
More specifically, overconfidence can lead to you rejecting a good deal that pays you the market value for your company. To make sure this doesn’t happen to you, it’s best to seek out an objective third-party valuation. This can help you get a fair understanding of your business’s price range so that you’re prepared to accept the right deal when it comes along.
Failing to pre-qualify buyers
When selling your business, you may hesitate to screen out candidates early for fear of scaring them away. However, pre-qualification is an important part of the selling process. It will keep you from wasting valuable time with a buyer who may not have the capacity to make the purchase.
Taking a completely hands-off approach
It’s typically a smart move to seek out professional assistance when selling your company. But that doesn’t mean that you should ignore the process altogether. Nobody is going to care as much about your company or understand its intricacies as well as you.
That’s why it’s important to look for ways that you can support the professionals that you work with while they do their job. You can play a key role in instilling confidence in potential buyers and helping them understand what makes your company special by being quick to provide answers to questions and up-to-date financial performance information. This could have a huge impact on the quality of the eventual deal that you agree to.
Failing to present the company to too enough buyers
The old saying is “one buyer is no buyer.” Not getting enough buyers to the table could result in a subpar valuation. Multiple buyers is the tried and true way to drive the valuation of the company as high as possible.
If you aren’t able to staunchly defend your business valuation through the threat of other interested parties, then buyers will be able to walk all over you and haggle you down to a price that’s less than what your company is worth. So make sure that you understand how much your company is worth and that you can articulate that to a buyer with hard data, and other options, before entering into a negotiation.
Keep yourself protected by enlisting the help of a professional
Selling your business can be a very complicated process. The common mistakes that we’ve listed above are just a few of the ones that you might run into while selling your company.
If you really want to keep yourself protected, it’s best to enlist the help of a professional. They’ll be able to guide you through the selling process safely and make sure that you come out of it with a deal that accurately rewards you for the valuable company that you’ve created.