You have worked hard to build up your business from scratch and now there is an opportunity to be rewarded for that toil and commitment, what you don’t want to do is undo that effort with a deal that isn’t right or doesn’t compensate you enough.
There are a number of classic mistakes that far too many small business owners make when they decide to sell. Discover what mistakes to avoid before you sign on the dotted line.
Here is a look at some of the things you don’t want to do when selling your business, including why it doesn’t pay to take things easy at this point, how to get your timing and the price right, plus a tip on finding the right person to help secure a buyer.
No time for complacency
When you have gone from “I am thinking about selling my pharmacy” or whatever type of business you run, to securing a deal that both parties have agreed on, what you need to concentrate on is making it to the finish line without slowing down.
What tends to happen with some business owners is that they think all the hard work is now done and they take their foot off the gas thinking they can cruise towards the sale and the big payday they have been waiting for.
Once you have agreed on a deal to sell your business this is definitely not the time for taking it easy or being complacent, as that could be a big mistake.
If you stop doing what you normally do and mentally start to wind down and prepared to hand over the reins to a new owner, your business will probably suffer and revenues could fall. That could potentially be disastrous if the buyer spots a downward trend in revenues, as it presents a good opportunity to negotiate a lower sale price at the last minute.
There will be plenty of time to reflect on your success in selling the business when the money is in the bank. In the meantime, carry on as normal and keep the business at the same level that made it attractive to a buyer in the first place.
Timing really matters
Building up your business in a short space of time and then listing it after only a matter of months, is often going to be far too soon to attract a buyer, but waiting too long to let go and sell up, can also be a big mistake.
Read also: How to Handle Rapid Growth of Your Business
As with so many things, timing is so critical when you are listing your business.
There are a number of key factors that can help you determine when the time might be right to look for a buyer for your business.
The asking price and your track record are two of those factors that really matter. If you have a business that has been valued at seven figures, any potential buyer is going to want to see a lot of historical data that backs up and justifies a big number. Generally, the higher the asking price the more history the buyer will want before they agree to put their cash down.
Think about how your valuation can be validated and how much historical data you can provide, as this will help you to get the timing of your sale right.
Putting a price on potential
You are going to have made a heavy emotional investment in your business along with any cash you have used, and that can sometimes cloud your judgment when it comes to agreeing on a realistic sale price.
It is perfectly understandable that you might think your business is worth more than it actually is because you have put so much into making it a success, but overpricing it is clearly going to deter buyers and prevent you from accepting what might be a reasonable offer.
It is fine to be enthusiastic about the future potential of your business but it is not normally ok to make too much of that potential in the asking price.
The trick is to get your buyer to imagine the potential themselves, but to be prepared to accept an offer that reflects where the business is right now.
Take your time finding the right person to sell your business
Once you have reached a decision to sell your business it can be tempting to think that it won’t matter too much who you appoint to represent your business and find a buyer.
Finding the right broker or consultant will often be critical to your success in securing a sale, so take your time seeing a few brokers and check out their track record as well as deciding whether you can work with them right through to the end of the deal.
You have worked hard to get to this point and now it is a case of making the right moves and avoiding some basic mistakes so that you can enjoy success in finding a buyer for your business.
Bailey Long shares his knowledge and experience of liquidating a company. His articles appear on small and larger business blogs helping people to follow the correct steps when they decide or are forced, to close down.