Selling your small business requires a lot of due diligence on your part, which is why the business advisors at BCMS (https://www.bcms.com/gb/en-gb) recommend you seek the advice of professionals to avoid making mistakes that will affect your profit.
To avoid the frustrations and challenges most small business owners face when they sell their business, these are five mistakes you should avoid when selling your small business.
5. Lack of Preparation
The biggest mistake small business owners make is not being adequately prepared to sell their business. It is very important that you address several key aspects before you list your business for sale. Things like financial documentation, lease issues, sustainable profitability, and staffing problems need to be addressed before you list your business if you don’t want your sale price to be affected.
4. Unwillingness to Hire Professionals
Some small business owners like to save money so they think hiring financial advisors or lawyers are unnecessary when trying to sell their business. While not hiring professionals to help with the sale of the business will save them some money, it could also lead to a lot of unforeseen problems.
Having professionals in your corner makes the whole process run smoother and saves you money in the long run so make sure you hire professionals before you sell your business.
3. Overconfidence
Business owners tend to believe their business is worth more than it usually is because of all the work they have put into it over the years. This level of overconfidence tend to mean the business owners go into negotiations believing they are going to get top dollar for their business, which isn’t the case.
Valuation of a business is based on quantifiable criteria, not the business owner’s estimation of the business’s worth. This is why it is important to get a third party valuation to ensure an impartial valuation of the business.
2. Confidentiality
When a business is being sold, the company acquiring the business usually requires confidentiality because they don’t want competitors to swoop in on the business they are trying to buy. Hiring a broker can help you sell your business discreetly which will make the sale go smoother.
1. Failure to Address Transition
A lot of business owners get caught up in the sale of their business that they fail to address the transition process. In a lot of cases, the company buying the business want’s the previous owner to stick around for a while to make the transition go smoothly, so you have to make sure you agree on the length of time that you will be required to stay on, and your compensation. You should also give your employees fair notification about the sale of the business so they will k now how much time they have to look for a new job if they don’t want to stick around and work for the new owners.
