You know what it takes to start and run your business in order to make it a success. Well, selling your small business takes just as much strategy and effort! After all the blood, sweat, tears and money you’ve poured into your business, you need to be able to fetch the best price for it. Otherwise, it’ll be like running hard to keep the first position and tripping just before the finish line. And nobody wants that, except maybe buyers.
So many small business owners sell themselves short, but we’ve listed some of the common mistakes people make when they sell, so you can try to avoid this.
1. You try to sell on your own
Can you sell a business successfully on your own? Yes. Is it challenging? Way more than it needs to be! Look, as the owner, you know all the details of your business. While you may be completely capable of selling your business on your own, there are so many complexities to it that will take your attention away from actually running your business that you could be doing an injustice to yourself. Business negotiations can take years, and if you’re not focusing on keeping the value of your business up on the daily running, there’s a good chance you’ll drop the ball, and the value of your business could drop with it.
Top tip: A wise move when you decide you want to sell your business is to hire a business broker, like Lloyds Business Brokers. They will help you take care of everything from valuation to final negotiations and all the paperwork in between so you can do what you’re best at and get the right price for your business.
2. You set a minimum price
Everyone has a default of setting a minimum price on their business when selling. Big mistake! Unless you’ve had your business accurately evaluated, you don’t have a minimum price. The risk of setting a minimum price is that you could also either set the price too high or too low.
Top tip: Don’t leave your business valuation to guesswork and put a price out there, have it properly evaluated and don’t set a minimum price. Wait for offers to roll in.
3. You try to sell to the competition
It should make sense to try and sell to a competitor; after all, your business is what stands in their way of holding the monopoly, right? Big mistake. Your competitor will almost never give you a fair offer – even the friendly competition. Approaching someone you know in the same line of business without taking the proper steps means the process will generally start over a business dinner, and then through discussion, they learn what the “unexpected realities” are and will use this information to diminish the offer, leaving you without competitor bids and therefore needing to settle for their offer.
Top tip: Cast a wide net when selling and ensure that you have a solid non-disclosure agreement with any potential buyers to keep the competition for your business strong.
4. You take the first offer
Even when there is a pressing need to sell, never settle for the first offer to acquire your business. You may avoid the hassle of sifting through multiple bids and negotiations, but in most cases, it’s at the expense of fetching the best price for your business. Why? Because it’s unlikely that a prospective buyer will give you a good price without competition. Your business may be worth a lot, but competition will drive the price right up over the odds.
Top tip: If the thought of having to go through multiple bids is too much for you, hire a good business broker. They should have an extensive list of potential buyers and will handle all the stress that comes with the exit period.
5. Not giving yourself enough time to sell
When you’re in business sale mode, it’s pivotal for you as the owner to continue to work on your business and find a balance between working as usual and prioritizing the sale, and this can’t happen if you don’t make time for both or don’t give your business enough time to sell as it can take years before heading into final negotiations and signing over the business.
Top tip: Prospective buyers will generally want to see the books for at least the past three years. So, give yourself a few years to get everything in order before putting it on the market. This will give you time to improve its value and prioritize the sale when it comes around.
Final thoughts
When you’re selling your small business, always go for gold! It can seem quite intimidating to finally put a value on your business that you intend to sell it at but don’t sell it for anything less than it’s worth. At the same time, it’s also crucial to be realistic because playing hardball or setting the price too high can also cost you. A good way to set the sale up for success is to get a good business broker who will evaluate, help you prepare, find prospective buyers and see you through till you’ve got a good deal.
