In this article we will explore some common mistakes sellers make when selling their business. We will take a look at some of the mistakes sellers make, along with some of the repercussions.
Not Seeing the Buyer’s Perspective
A major mistake sellers make is that they do not look at the situation from the buyer’s perspective. One thing a seller can do is to ask themselves these key questions.
“If I was thinking about buying this business, what information would I expect to see?
“Would I trust this information if I was the buyer?”
These questions will help a seller start thinking about a buyer’s perspective. It is advantageous for a seller to invest the time to understand the buyer’s position. This can help avoid problems and help with the negotiation process.
Neglecting the Business
Another mistake sellers make is that they neglect the business during the sales process. Sellers must maintain the day-to-day operations of the business. After all, the business is still theirs! Business deals fall apart all the time. This is true for any size deals.
Lack of Preparation
Any serious seller will have all their documentation available and well organized. This would include financial records, business forecasts, environmental studies and more. It is important to make a good impression. Sellers must convey to prospective buyers that their business is well organized and ready to be sold. Disorganization could lead prospective buyers to believe that the business is not operating in a professional manner.
Misconceptions About the Value of the Business
A real “deal killer” can be when sellers do not understand the real value of their business. This issue can lead business owners to set a price too high, or even completely unrealistic. Many sellers have put years of blood, sweat and tears into their business. Learning that their business is not as valuable as they had hoped can be an emotional, psychological and financial blow all in one. Sellers have to adjust to the realities of what the market will bear.
It is very important for sellers to avoid these mistakes. Working with a skilled and proven business broker or M&A advisor is a way for sellers to avoid significant problems that could arise.