Selling a business can be a stressful process. After building your business from the ground up and not having experience selling a business, the process can be very difficult. There are several common mistakes that happen to small business owners when selling their business. Continue reading for these common mistakes so you will be able to avoid them!
Over Valuing Your Business
Having your business at a higher value than it truly is worth, can delay the selling process and cause confusion for potential buyers. As an owner, you have to consider the buyers point of view. If you have a biased view of your business when thinking about the value, you are likely to value it higher than it actually is. Value is based on your business's income generation. You need to have your business listed at a fair market value to attract sellers.
Not Paying Attention to Day-to-Day Operations During Due Diligence
Once there is a letter of intent from a buyer, we've seen owners begin to neglect their business's operations. A buyer can easily back out until the deal is truly done. If your business suffers prior to the official sale, the buyer may decide they no longer want to purchase your business. Due diligence can be a long process but staying on top of your business during this time so the transaction can be finalized is crucial.
Not Vetting a Potential Buyer
If you have a potential buyer, you need to ensure that they are credible. While it is exciting to have a buyer for your business, you need to know the buyer's background, ownership capabilities, financial standing, and qualifications. You want to know at the beginning that the buyer is a credible person instead of reaching the end of the transaction process and having it fall through.
It is difficult to predict the perfect time to sell your business. There are two things to consider when trying to decide whether it's a good time to sell your business; it is better to sell when your business is growing and have you taken enough time to put your company in a good position & develop a plan for selling. Figuring out the best time to sell your business takes precise planning.
Not Using a
Whether you have sold a business before or not, you may benefit from having a professional assist you through the process. Since you will be still managing the business, it is important to have someone who will have the selling process at the front of their mind. A professional will be able to give a fair market value to your business, continue the due diligence process, vet potential buyers, and make sure you are making a good decision on selling your business.
Selling your small business does not have to be a stressful experience. By avoiding these common mistakes, you can have a smooth selling process.