Selling a business can be a long and complicated process. It’s a decision that requires a lot of preparation and strategy, as it involves not only the business but the owner’s life investment. Unfortunately, there are common mistakes that business sellers make, which hurt the process and their potential earnings in the long run. Here are the top five mistakes that business sellers make:
1. Underestimating the importance of preparation
Many business owners are eager to sell their business as quickly as possible but forget to do the appropriate preparation. Before putting your business on the market, you need to make sure its financial records are in order, everything is well-documented, and that there isn’t any legal or financial liability you are unaware of. Failure to do this preparation can lead to lowered value and unwanted surprises during the negotiations.
2. Overvaluing the business
One of the biggest mistakes a seller can make is overvaluing their business. An overvaluation can occur when the seller is too attached to the business, isn’t entirely objective or is unaware of the true value of the company. Overvaluing the business can lead to unrealistic expectations, low buying interest and, prolong the selling time.
3. Failing to Hire professionals
Failing to hire an attorney, accountant, and business broker early on can lead to many potential problems. Business brokers play a significant role in the buying and selling process as they know how to price businesses, market and qualify buyers. An attorney and accountant can help you review contracts, analyze finances and give you the right legal advice.
4. Not seeking multiple buyers
It’s natural for a seller to feel obligated to sell to the first interested party, but this isn’t always the right decision. You can gain much more out of your business if you seek multiple buyers, generating competition and potential higher offers. The goal is to identify buyers who are genuinely interested and qualified to afford purchasing it.
5. Not being Negotiable
Sellers need to be flexible and open to negotiation. Failing to be flexible in the negotiations process can easily scare away interested buyers. It’s essential to understand that it’s unlikely that the first offer will meet all your expectations. Expecting that the first offer will meet all your expectations could result in making less than expected.
In conclusion, the process of selling your business requires much more than listing it for sale. It’s essential to avoid common mistakes and hire the right professionals to guide you through each step. Ensuring good preparation, proper valuation, seeking multiple buyers, and being flexible in negotiations reduces the likelihood of making a wrong decision that could impact the sales process negatively.