Top 5 Mistakes You Can Make When Selling Your Business

 

Business owners have different reasons for deciding to sell.  Fortunately for business owners, they have an option to plan an exit strategy anytime – this is why it is good to undergo annual strategic planning and financial evaluation with accountants and auditors. But just because you have the best laid plans and because you know how to run a business even if it is in sales, it does not guarantee the best possible business sales outcome.  Here are some of the mistakes that are often made when selling your business.

·         Overvaluation and undervaluation - You may have a good grasp of the value of your business or your company.  The pitfall lies in being too subjective. Most owners fail to look at their business in the perspective of a buyer and too much in how much they value their businesses (or how much they need the cash now).  So they either overprice or underprice. Overpriced businesses deter prospective buyers which prolongs the whole process. Underpriced businesses also give the wrong impression to prospective buyers and if you do close the deal, you’ll probably walk away happy now but regret your decision later.

·         Not taking the time to prepare – Selling a business is very much like selling a house.  It is not enough that you make it look in order, but it should be in order and it should look “lived in”.  Take the time to create a business portfolio that is attractive to investors and you have to make sure that the facts and data are verifiable – from cash flow to client and supplier database.  You should have a working business plan that your buyers (and their investors) can look at.  Most buyers will need the help of creditors and your business portfolio should look good for them as well.

·         Selling too soon or too late – Start-up businesses are particularly harder to sell especially if it has not yet reached its full potential.  Putting up a business means you are also willing to put up with the risks. There are those who sell instead of having to face these risks and leave while the getting is good.  There are those who just are too stubborn to let go and decide when it’s too late and when there is little to gain after the sales.

·         Not practicing full disclosure – this one can get you in a lot of trouble including a lawsuit.

·         Selling the business on your own – this is the worst you can do, especially at a time when the market is almost entirely dictated by the buyers.  Business brokers are partners who you cannot forego when selling your business.  Not only are business brokers equipped to give you sound advice to prevent the previous enumerated mistakes, they also have the resources to help you get the best possible deal within the best possible timeframe.