When it comes time to sell your business, there are a number of common mistakes that can trip you up and cost you dearly. Here are 10 of the most frequent missteps made by sellers – and how to avoid them:
1. Not Knowing Your Business’s True Value
One of the first and most crucial steps in selling a business is to accurately assess its value. Unfortunately, many sellers have unrealistic expectations regarding the true worth of their businesses, often significantly overvaluing them.
2. Not Being Able to Answer Questions About Your Business
Sellers who are unable to provide detailed answers about all aspects of their businesses – including financial information and operating procedures – are likely to find the selling process much more difficult.
3. Failing to Prepare Your Business for Sale
Just as you would stage a home for sale, it’s important to take steps to make your business as attractive as possible to potential buyers. This may include everything from cleaning up the premises and updating equipment to improving financial recordkeeping and implementing new marketing initiatives.
4. Not Finding the Right Buyer
Not all buyers are created equal, and it’s important to find one who is a good fit for your business. In addition to having the financial means to purchase your business, the ideal buyer should also be knowledgeable about your industry and have compatible business goals.
5. Not Having a Solid Exit Strategy
An exit strategy is essential for any business owner looking to sell, and yet many fail to develop one. Without a plan in place for what you will do after the sale – including where you will go and how you will reinvest your proceeds – it can be difficult to move forward with the sale.
6. Waiting Too Long to Sell
Once you’ve decided to sell your business, it’s important not to delay in putting it on the market. While many sellers are under the impression that they can boost their businesses’ value or wait for a better time financially, this rarely happens, and waiting can lead to decreased value.
7. Neglecting Upgrades, Maintenance, or Repairs
If your business is showing signs of wear, it’s time for some upkeep – but many sellers put off necessary improvements due to other priorities or a lack of funds. However, ignoring these repairs can ultimately decrease the value of your business.
8. Failing to Prepare Your Team for the Sale
When you sell a business, it’s inevitable that you will have to say goodbye to some of your employees. Before doing so, it’s important that you take steps to help them adjust, including helping them find new jobs and providing references.
9. Not Hiring a Lawyer, Financial Advisor, or Business Broker
While you may be tempted to handle the sale of your business by yourself, doing so can actually be more costly and time-consuming than working with professionals. By hiring qualified advisors – including an attorney and a business broker in Utah – you can ensure that the process goes smoothly and legally.
10. Not Asking the Right Questions in Listing Negotiations
It’s critical that you ask the right questions during listing negotiations, as the answers can help you determine whether a buyer is truly interested in your business or has ulterior motives for making an offer. Some noteworthy questions to consider include:
- What is your business’ main purpose for acquiring my company?
- What are the top three challenges that you think our businesses will face after the acquisition?
- How do you envision our businesses integrating?
By avoiding these common mistakes, you can help ensure a successful sale of your business – and get the best possible price in the process.