7 Mistakes Business Owners Make When it's Time to Sell
7 Mistakes Business Owners Make When it's Time to Sell
Selling a business is a complex process that requires careful consideration and strategic planning. Unfortunately, many business owners make critical mistakes when it comes time to sell a business, which can result in missed opportunities and lower valuations.
Here are seven common mistakes that business owners make when it's time to sell 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
- 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.
4. Not engaging professional advice
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. Seeking professional advice, preparing in advance, and approaching the process with a clear and rational mindset are key steps towards
About the author
CEO Bsale Australia
Vanessa is the current manager and CEO of Bsale Australia. Over the past 11 years as a business owner, she understands what it takes to grow a ...