7 Mistakes Business Owners Make When it's Time to Sell

by Vanessa Lovie 2nd of August, 2023

7 Mistakes Business Owners Make When it's Time to Sell

You don't want to be one of those business owners who looks back at the costly mistakes you made.

It can take time to sell a business, so you need to ready for the journey. This is like the 'pep-talk' to help you avoid some of the most common mistakes.

You dont want to loose value, or at worse case have to close your business and walk away. You've worked hard to build the business, so now lets get some good money for the business sale.

Here are 7 mistakes, owners make and how you can avoid them.

1. Selling Due to a Need Rather Than a Plan

One of the most important lessons for business owners is to avoid selling their business out of necessity and instead have a well-considered exit strategy.

Life can present us with unexpected circumstances that may lead us to make hasty decisions, such as selling a business to cope with personal situations.

Some of the most common driving factors for suddenly selling a business are:

Health Issues
Burnout
Financial Difficulties
Marriage Breakdown
Partnership Disagreements
Home Relocations

However, it is crucial not to let these circumstances dictate when to sell, as it may result in simply offloading or closing the business, which is not an ideal outcome.

To be prepared for the challenges of selling a business when faced with an unexpected curveball, it is essential to have an exit strategy in place. By ensuring that your business is always in a "sellable" state, you will be ready to explore your options and obtain the optimal price when the time comes.

2. Making a Rushed Emotional Decision

Emotions can easily cloud judgment, particularly when it comes to selling a business that has been painstakingly built.

Making a hasty, emotionally-driven decision without thoroughly assessing market conditions, business potential, and personal readiness can have severe consequences. It's crucial to take a step back, breathe, and approach the decision with a clear mind, taking into account both financial and non-financial factors.

Selling a business is not a swift process; it can take 6-9 months!

Ensuring the business maintains its cash flow, and providing adequate training and a smooth handover are integral parts of the process. By understanding the time and effort involved in selling a business, you can navigate the process more effectively and increase your chances of achieving a successful outcome.

3. Selling When the Business is Struggling

Attempting to sell a business that is going through a rough patch or facing significant challenges can be a costly mistake.

Buyers are typically interested in healthy and thriving businesses with growth potential.

It is a good idea to focus on resolving any operational or financial issues before entering the selling process. Reduce your expenses, increase revenue and create a better financial position to obtain an optimal price.

Strengthening the business's position and demonstrating its value will increase the chances of attracting qualified buyers and securing a favorable deal. It can also go a long to way to getting a faster deal.

What is your quarterly growth %? What will be the ROI? These numbers matter buyers.

Try to avoid mistakes when selling a business

4. Not Engaging Professional Advice

Selling a business is a complex transaction that requires specialized knowledge and expertise.

Failing to engage professional advisors, such as business brokers, accountants, and lawyers, can lead to costly errors and missed opportunities.

These professionals can provide valuable guidance throughout the selling process, from valuing the business to negotiating the terms of the sale. Their experience and insights can significantly enhance the outcome and protect the owner's interests.

5. Openly Advertising

While it may seem tempting to openly advertise the sale of a business, doing so can create uncertainty and potential damage.

Prematurely disclosing the intention to sell may lead to employee and customer concerns, as well as competitors taking advantage of the situation. It's generally advisable to maintain confidentiality during the early stages and only disclose the sale to qualified and serious buyers under non-disclosure agreements.

On Bsale you can always try to reduce the recognition of your business sale by using stock images, private seller as the contact and an alternative phone number to the business.

6. Expecting a Quick Sale

Selling a business is rarely a quick process.

It takes time to find the right buyer, negotiate the terms, conduct due diligence, and finalize the transaction. Setting unrealistic expectations and assuming a quick sale can lead to disappointment and pressure to accept less favorable offers. Business owners should be prepared for a potentially lengthy process and be patient, focusing on finding the right buyer rather than rushing to close the deal.

On average, it takes 6-9 months to sell a business.

7. Not Having Systems in Place

Prospective buyers look for well-organized and efficient businesses.

Failing to have robust systems and processes in place can raise concerns about the businesses sustainability and value. Implementing clear financial reporting, documenting standard operating procedures, and establishing a strong management team can significantly enhance the business's appeal to potential buyers.

Investing in these areas before initiating the sale process can yield substantial returns. It also opens up your pool of buyers to investors and buyers from different industries as they are looking for profitable enterprises that can generate them money, but will require good systems in place - they dont want to work ‘in’ the business.

Selling a business is a significant event that requires careful planning and strategic decision-making.

By avoiding the mistakes outlined above, business owners can increase their chances of a successful sale, maximize the value of their business, and ensure a smoother transition to the next chapter of their lives.

You need to be the best salesperson for your business, whether you decide to sell privately or a broker. Don't loose sight of the importance of your role in selling the business.

Tags: selling acquisition small business entrepreneurs