After checking out our guide on selling a business quickly, you will want to make yourself aware of the common errors people make when trying to sell their business. So, to save you the hassle of doing your own research, here are the 5 most common mistakes you need to avoid when selling your business.
Check out the guide below!
- Selling When Revenue Is Down
Choosing when to sell your business is a big factor to consider, but many business owners make the mistake of waiting until their business revenue is down to sell their business. This means that your business is in a weak negotiating position and potential buyers could use those low profits as an excuse to purchase your business for a lower price.
As a result, you should check your forecasts and business’s financial projections to anticipate when your business’s revenue will be low - and when it will be much higher. Selling when revenue is up makes your business more attractive and thus, you are more likely to sell it on for a better price.
- Not Getting Your Business Prepared
Disorganization is a huge issue when it comes to selling your business. The last thing you need when trying to negotiate a deal or finalize a sale is to discover you can’t find the right documents or you haven’t cleared up some loose ends before the deal is done.
You should always prepare your business for a change in ownership - the same way you could clean up and clear out a house before you move! This will make it more attractive to buyers who don’t want to purchase a disorganized business. So, organize your records and documents, tie up loose ends, talk to your staff to prepare them for this change, and sort out your taxes.
This way, you can sail through the selling process smoothly and also make a clean break once your business is done.
- Jumping On The First Offer
If you are desperate to sell your business, you may be tempted to jump at the first offer that comes your way - but this would be a huge mistake.
You should always be patient when selling your business as it will help you sell it for a better deal. Some buyers may be sneaky and try to offer to buy your business for a price that is way below it’s value - and if you do accept, you are cheating yourself of a lot of money.
Negotiating is key and it’s a good idea to get some representation to help support you through these processes.
- Asking For The Wrong Price
Before you even begin negotiating with buyers, you should first list your business for a certain price. This is a standard practice when it comes with selling pretty much anything - but it’s important to pay attention to what price you are asking for from your potential buyers.
You need to get your business appraised so you know it’s worth and keep in mind the drawbacks of listing your business for a price that is either too high or too low. If it’s too high, you could drive away potential buyers who will know from their own appraisals that your business is being overpriced. On the other hand, selling your business for too low a price will only be cheating yourself of a fair deal.
- Lack Of Transparency
When selling your business, it will be tempting to try and hide all the downsides and challenges that come with the business itself. However, this can work against you as potential buyers prefer transparency when looking over the details of your business.
Everybody knows that every business will have their own challenges and obstacles - and trying to pass off your business as without any will only make you look suspicious. If these issues do come to light later on in the selling process, then this could completely destroy the entire agreement.
Hiding details may seem like the right thing to do to try and sell your business, but you could be cheating yourself of a sale instead. So, be honest - you don’t have to bear all the disadvantages of your business, but it’s important to be transparent on certain topics to help you sell your business.
In Summary
There are a lot of mistakes you can make when selling your business, but the 5 mentioned above are among the most common. So, take note and follow the advice above to avoid making the same mistakes!
