Selling a business is a huge decision and not one that should be made without a complete understanding of the process. Rushing in without doing some research or seeking advice from a professional broker can see you potentially lose thousands of dollars. Here are the most common mistakes business owners make when selling and how to avoid them.
Pricing the business wrong
To avoid being disappointed with the outcome of your sale, you must price your business correctly. There is no point putting a hefty price tag on your business when it is not attainable or worth that much. This will only deter buyers and prolong the amount of time your business is up for sale. On the other hand, pricing your business too low can see you short-changed. When deciding on your selling price, you should consider the profit your business makes, competitors in the area, whether money needs to be spent on the business and the current market.
Providing misleading information
When selling it is natural to want to present your business as best you can, but you have to stick to the facts rather than elaborating or stretching the truth, if the buyer discovers that you haven’t disclosed vital information or told a little white lie, you can guarantee that they will retract their interest.
Not succession planning
When putting your business up for sale this a key step that every seller should do be taking. Taking the time succession plan instills confidence in your prospective buyers, they will see you have a strategy in place to maintain the business’s success once you step away. By doing this, you are more likely to get a price that you are happy with. Once you have decided to sell it is best to start the succession process as soon as you can. Most businesses take time to sell it doesn’t just happen overnight. It pays to be organised from the get-go – making sure you keep a detailed account of all business records, so when the times comes to put your business on the market you are as prepared as possible and giving yourself the best chance of getting your asking price.
Breaching confidentiality when trying to sell your business can negatively impact your sales potential and jeopardise your working relationships. Experienced brokers appreciate the importance of maintaining confidentiality when selling a business.
Did you know that on average a business takes anywhere from 6 to 9 months to sell – sometimes even longer. We understand that not every business has the luxury of time but if you can, it pays to be patient. Be prepared for times where you will have regular leads and times when there is none. Waiting for the right seller rather than just giving it up for the first offer you receive will ensure you get the best price.
Not choosing a reputable and experienced business broker
Choosing to go with the cheapest broker can find rather than investigating whether they are reputable or not can cost you money and time. There is no point choosing just anyone to try and make a quick sale if they don’t have the skills, knowledge, or industry contacts to sell your business it is unlikely you will be presented with the best offers. Make sure the broker is experienced in selling businesses like yours and if they have a background in your trade, even better. Your broker should advise you of your options and offer realistic feedback.
Leaving the entire sale up to the broker
Many sellers have the misconception that once they’ve signed the contract, the broker will take care of the rest. Whilst a reputable broker will market your business and bring you leads, you can help increase the likelihood of selling if you take a proactive approach in marketing your business, after all, no one knows your business as well as you do. Have a chat to your broker about ways you can assist in the selling process. You must take initiative when the broker brings you solid leads, interacting with prospective buyers and promoting the businesses potential and success can be the difference between them buying or not.
Failing to pre-qualify purchasers
To ensure a successful sale, it is imperative that you pre-qualify potential buyers. By not doing so, you are sharing sensitive information to people who aren’t suitable in the first place. Around 90% of people who show interest in a business can’t purchase it, which can waste time and money. It protects your businesses private information from being disclosed to just anyone by only sharing with eligible buyers.
Talk to an industry professional
Remember, when buyers are looking for a business, they are usually wary of its success and rightfully so, the main reason businesses go up for sale is because they aren’t profitable. Take the time to do some research, be prepared and have a strong plan in place so you can put your best foot forward when it’s time to sell. If you are looking for an experienced business broker to sell your business or need some advice, get in touch with our expert team here at Morgan Business Sales. With more than 24 years in the industry, we know a thing or two about businesses, we’d love to help if we can.