3 Common Mistakes to Avoid When Selling a Business
Selling a small business can be a lucrative move for the owner if done right. However, in many instances, small businesses make mistakes that can end up costing them thousands of dollars. When you consider all the hard work you’ve put into growing that business, it is a real shame to lose out right at the end. What’s more, most of these common mistakes are easily avoidable.
Selling a business requires certain skills and is often not straightforward. Here are some of the most common mistakes that entrepreneurs need to be aware of when considering selling their small business:
Waiting Too Long to Sell
Poor planning is often the cause of many business owners missing their window of opportunity to sell the business. It usually takes an average of two to four years to sell a small business, so having a long-term plan is always handy. Keep your records in order. This will ensure you don’t run into problems when it comes time to sell and you know when a lucrative offer is put on the table.
Over or Undervaluing the Business
You need to be reasonable when valuing a business. It is a bit audacious to ask big money for a business that generates minimal profit or is operating at a loss. Similarly, selling a business quickly by undervaluing it is also a common problem. It’s important to look at the wider industry and analyze the price similar businesses are selling for. Even those who work with money each day don’t get it right. For instance, even accountants need to teach themselves how to value a CPA firm before putting their business on the market. At the end of the day, you’ve invested time building a business and its only fair that you receive a decent payout when it comes time to sell.
Failing to Find a Good Broker
When it comes to selling your small business, finding the right broker for the job is a key part of the process. Sometimes, business owners take the easy way out by choosing the first person they find. This can often lead to financial losses in the long run. You’ve invested time and money growing your business, so it is important to find a broker that will have your best interests at heart and can also manage your expectations. Be sure to invest time interviewing brokers so you can get a feel for the person who will represent your interests.
Not Investing in Marketing
Even when you do find yourself a good broker, don’t assume they will do all the work when promoting the sale of your business. No matter how good a broker is, they don’t know the business the way you do, which is why you are best placed to promote the business you’ve built. A good broker will certainly bring some buyers to the table, but it is important that you take an active role when it comes to promoting the benefits of this business.
Selling a business is a complex matter and you need to be prepared if you want to walk away with a profit. After all the investment you’ve put in, it’s only understandable that you’ll feel attached to their venture. Think long-term, and try not to rush the process. Call on support from other people who’ve been through the process and get recommendations for a good broker that can guide you to ensure the sale goes well.