In this article we discuss mistakes sellers make when selling their business.
Not Knowing The Value Of The Business
Prior to entering the selling process, a business owner should know how much their business is worth. It’s the only measure that takes into consideration where your company has been, where it is today and, most importantly, where it’s going in the future. A business valuation provides the business owner with multiple facts and figures regarding the actual worth or value of the company in terms of market competition, asset values, and income values. The business value is the business owner’s most important asset.
Not Preparing The Business For Sale
Preparation is necessary prior to putting the business on the market. Make sure the books are in order. Be sure the appearance of the business is good. This includes the facilities and the company’s website. Your company’s website is often times the first impression a prospective buyer will have of your business. If you are not prepared to sell, you may be leaving a lot of money on the table. Delaying the sale for a short period to polish up the details is a worthwhile investment.
Not Being Able To See The Business Through The Eyes Of A Buyer
It is natural for a business owner to see their business in a favorable light and overlook the problems. Sellers need to approach their business realistically. By recognizing the deficiencies of the business, sellers can better deal with the concerns of the buyer. The best way to handle any potential problem areas is to bring them up in the very beginning.
Not Knowing The Buyer
Knowing the buyer helps to make a smooth transaction. A seller can make informed decisions about whether they are the right people to operate the business. Know the buyer’s motives, their interests, and their backgrounds. Knowing the buyer can help resolve issues that will arise when negotiations begin. The more you know about why a buyer wants to buy your business, the better position you are in to know when to be firm in the negotiations and when to be flexible.
Trying To Sell A Company To A Buyer Who Doesn’t Want To Buy
How serious is the buyer? A buyer may indicate a great deal of interest, but then back out of the deal. Some buyers want to buy only on their terms and conditions. Some may have too many decision-makers to please. Other buyers only want to buy the “perfect” business. Don’t waste time on buyers who are not serious about purchasing the business. This takes away valuable time from those buyers who really want to buy.
Being Your Own Worst Enemy
Many business owners think they can do a deal by themselves. They don’t need or want any help. They think they are lawyers, accountants, business brokers and outside advisors all rolled up into one person. When the deal blows up they blame others, usually the buyer. Not using outside advisors is a serious mistake.
Not Understanding The Structure Of The Deal
A buyer presents an offer, the seller takes one look at the price, immediately says “no” and refuses to look any further. The price, within reason, is immaterial. The deal structure is the real core of the offer. The terms and conditions are important.
Not Being Able To Walk Away From The Deal
Many sellers don’t see the big picture because they are so involved in trying to put a deal together. They don’t realize that the deal isn’t a good one. It’s time to walk away from the deal and go on to the next one. Since sellers have invested a lot of time, effort and expenses, it’s often difficult to end it. In some cases that’s exactly what must be done. If the deal isn’t right and you can’t fix it, there is no other choice. It’s better not to do the deal than do a bad one.
Waiting Too Long To Sell
Many business owners wait until the last minute to decide to sell their business. They wait until business is down or they are completely burned-out. The time to sell is before the emergency happens. The time to sell is when business is good. A business owner should think about and plan the eventual sale of the business the day after it is started or purchased.