If you built up one of the more than 30 million small businesses in the US, that’s a worthy accomplishment. Yet, that doesn’t mean you still want to run that business a decade from now. Maybe you enjoy the process of building a new business more than running an established business.
If that’s the case, you will find yourself thinking about selling the business sooner or later. Of course, selling businesses is a different animal than building or running them. If you’re thinking you’ll sell soon, keep reading for six mistakes to avoid when selling businesses.
1. Letting the News Slip
Some business owners let the news slip that they’re selling the business before they finalize a deal. This can prove costly for you.
Employees may quit in droves under the expectation that they’ll lose their job anyway. Customers may walk away because they built their relationship with you. Vendors may play hardball where they once offered good terms.
2. Poor Prep
Selling a business isn’t like selling a used car. You must prepare a small mountain of paperwork, such as:
- Profit and loss statements
- Asset valuations
- Staffing assessments
- Leases or property deeds
All of these things will affect the overall value of your business in the marketplace.
3. Ignoring the Process
The business sale process takes a lot of steps. Even if you hire a broker and corporate lawyer, though, you can’t ignore the process. At the very least, you must spend some time talking to buyers.
4. Selling Too Fast
Once you made the decision that you will sell your business, it’s an understandable impulse if you want to sell your business fast. You put a lot of work into your business. You’ll probably experience some anxiety or second-guessing about the prospect of letting it go.
Of course, selling too fast can ultimately mean you don’t get a fair business price for your hard work.
5. Misleading a Buyer
No matter how tempting, you should never mislead a buyer about any part of your business. Don’t exaggerate your profits with clever math. Don’t underestimate the difficulties you face in maintaining necessary staffing levels.
These kinds of misrepresentations can leave you open for civil legal actions.
6. Not Pre-Qualifying Buyers
It may seem like pre-qualifying buyers might scare some people off, but it’s a crucial step. It drives off anyone who isn’t serious and helps you winnow out anyone without the financial resources. Everyone saves time.
Selling Businesses the Smart Way
Selling businesses takes almost as much work as starting or running them. You must keep it quiet so you don’t scare employees or vendors. You must work up piles of paperwork that establish the value of the business.
That’s not even including meetings with a business broker, corporate lawyer, or potential buyers. You must also temper your urgency to sell. While you’re ready to move on to something else, the market moves at its own pace.
Looking for more insights into building, running, or selling businesses? Head over to our business section and check out the articles there.