Last year, over 10,000 businesses were sold in the United States. Entrepreneurs tend to thrive when presented with a new challenge. If a business owner feels like have done and seen it all in their existing role, then it may be time to move on. Running a business you are not fully committed to or interested in can create problems.
Do you feel like it is time to sell your existing business? If so, there are a number of things you have to do to get ready for this process. Read below to find out about common mistakes to avoid when selling your business.
1. Attempting to Sell a Business Without the Help of a Broker
Finding motivated buyers is one of the most difficult parts of selling a business. Most business owners don’t have the time or the connections needed to find buyers. Instead of being unable to sell a business due to a lack of motivated buyers, you need to think about hiring a business broker.
In short, a business broker will assist you in doing things like finding buyers, negotiating a price for your business and drafting the paperwork needed to complete this transaction. While you will have to pay a business broker for their assistance, it will be worth it. Using business brokers to help you sell your business can make this process more enjoyable.
2. Accurately Assessing the Value of the Business
One of the most important things you will have to do when selling a business is coming up with a fair price. Some business owners make the mistake of setting a price before doing their homework. This can lead to problems like the business owner losing money or running potential buyers off due to an abnormally high price tag.
Avoiding this mistake is simple when seeking out the help of a knowledgeable business broker. A broker will be able to give you information about what similar businesses have sold for in the past. Having this information will make setting a competitive price for your business much easier.
3. Failing to Provide Potential Buyers With the Right Information
Before buying a business, a person will want to important information like what a company’s future sales look like, what risks are involved in buying the business and how fast they will get a return on their investment. Ideally, you want to provide a potential buyer with as much of this information as you can.
Being transparent when it comes to your yearly earnings can be helpful. You want to show a potential buyer just how lucrative your business is in the right hands.
4. Ignoring the Need to Prepare For a Buyer’s Questions
The worst thing you can tell a potential business buyer when asked a question is I don’t know. One of the main things a buyer will ask is why you are selling the business. Being honest and forthright about your reasoning can help you win a potential buyer over.
If you are hesitant to answer this question, a buyer may think you are trying to pull a fast one on them by unloading a business that is on the decline. Taking the time to go over the answers you will give to common questions asked by a potential buyer can help you avoid blowing a potential sale.
5. Not Preparing For Life After the Sale
Some business owners put so much time and energy into selling their company that they neglect to think about what they will do once this process is complete. If you are selling your business and using the proceeds to retire, you need to speak with a financial advisor beforehand. They can help you accurately calculate just how much money you need to retire comfortably. With this information, you can avoid getting into a financial crunch in your golden years.
Now is the Time to Take Action
If you are waiting around for the “right time” to sell a business to arise, you will never pull the trigger. Waiting too long to sell a business can lead to it losing a lot of value, which is why now is the time to take action.
