Owning a business can be incredibly rewarding and is a dream come true for many people. Unfortunately, too many business owners make avoidable mistakes when selling their business. To avoid turning your business ownership dream into a nightmare, when it’s time to sell your business, be aware of the 7 Biggest mistakes to avoid when selling your business.
The benefits of a successful sale, in terms of financial reward and lifestyle, can be life-changing. The issue is, so many business owners overlook the importance of planning for the successful sale of their business. Failure to do so can have detrimental effects on the sale process, the time on the market, and more importantly, the final sale price.
Before your list your business for sale ask yourself “Is now the right time to sell my business?“
It sounds obvious, but too few business owners are not prepared for what they will do next. Always start with the end in mind. Have a plan, even if your plan changes, at least you have a place to start and an idea of where you might like to end up. In terms of what you would like to do when your business is sold and how much money you will need from the sale to support the lifestyle you would like to lead, once the sale is completed.
There is an old saying – a business is only worth what a buyer is prepared to pay. As a general guide, most businesses are valued based on the profits the business generates or on the value of business assets.
Setting an unrealistic ‘list’ price with an expectation that you will have more room to negotiate with an interested party, often ends up with genuine parties either showing less interest or walking away from the sale altogether.
You can’t easily sell a secret, and buyers can’t buy your business if they don’t know it is for sale. A carefully planned and well-written ad along with great images will engage with more buyers.
But, how your ad looks and reads is only half the battle in finding your buyer. Ensuring buyers see your ad is the key.
So it’s important to properly advertise and market your business, where buyers are looking.
Traditional classified style marketing on one website is simply not enough and will not attract the best buyers. You can read more about the best business for sale websites here.
Before preparing your ad, you need to first consider confidentiality, meaning do you want the world to know you are selling or take a more subtle approach. There are pros and cons to both scenarios.
If you promote your business publicly, your staff, suppliers, customers, competitors, and neighbours will all know your business is for sale. This may lead to more enquiries, possibly leading to a faster sale to someone already familiar with your business.
However, publicly revealing your business is for sale can be very disruptive to your business operations, through staff changes, unscheduled inspections, gossip, and customer loyalty just to name a few.
Taking a subtle approach means adverting your business opportunity, by providing factual but non-specific information about the business without revealing your business name or address and by using non-identifying images.
For most sellers, we recommend a confidential sale process.
When you get your first enquiries, maintain your composure, and don’t oversell your business or you can put the buyer off. You should treat every enquiry as though they could be the actual buyer.
In your first conversation with the buyer, you should be willing to answer some of the buyer’s questions, but it is also your opportunity to ask about the buyer’s skills, experience and plans. You should ask the buyer to sign a confidentiality agreement before providing any identifying information.
Be mindful that from your ad alone buyers won’t know enough about your business or the opportunity to make an informed decision, so having a good chat with them first might help you both save time.
The offer is about far more than just the price, you must consider all the terms of the sale holistically.
Ideally, you should take your business to the market when it is ready for sale and retain control over the sales process. When you react to an unsolicited offer from a buyer you inevitably give control of the sale process to the buyer reducing the strength of your negotiating position.
An unanticipated sale might expose certain weaknesses in your business that you have not had an opportunity to rectify and these may be used against you to reduce the selling price.
If you are willing to accept the offer, it is important to check with your accountant and solicitor for any final advice before accepting the offer.
Remember, the letter of offer is not a legal document, it is simply a guide to help the solicitor prepare the sale contract and both parties will rely on the contract.
If you are ready to sell your business you need to know where to find active business buyers.
Check our guide below or compare our listing packages.
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