Preparing your business to sell is an intensive process. It requires a lot of time and thought. It involves complex legalities and negotiations. And there are a number of pitfalls to avoid along the way.
If you’re looking to sell your business, here are six costly mistakes you should aim to avoid:
Starting Preparations Too Late
Selling a business for the best possible price is all in the preparation. You need to be ready to move when your business accounts and prospects look particularly impressive. This means getting all of the paperwork in order well in advance of a sale. Draw up financial reports, create a thoroughly researched business profile, determine how you will explain any periods of reduced profit (if there are any) and address any niggles in your company operations. Brokers recommend making preparations two years before you intend to sell.
Lack of Discretion
When you’re putting your business up for sale and trying to attract a buyer, discretion is paramount. If word gets out about the sale, you could begin to lose employees, customers and contractors who feel uncertain about what the future holds. As a result, your company will start to decrease in value just at the time when you want it to be worth the most. Only shout word from the LinkedIn rooftops when all invested parties – employees, clients, contractors and customers – have been reassuringly briefed on what is happening.
Failure to Attract the Right Buyers
When it comes to selling your business, it’s not just about finding a buyer. It’s about finding the right buyer. You’ll want someone with the knowledge to continue with what you’ve started, a responsible approach to your employees and customers, and the financial security to see the sale through to its conclusion. This means spreading the net far and wide. Do some research on where to advertise your business and get the kind of buyers you’re looking for.
When you’ve invested blood, sweat and tears into a company you’re likely to place a high value on it. But you need to separate the reality from the emotion. Likewise, if things with your business haven’t been going so well lately, you may fail to recognise the potential it still has for success. Get an impartial expert to value your company. That way you can be confident that you’re not over or under pricing.
Spreading Yourself Too Thinly
Selling your business is likely to take up a considerable part of your working life. But it’s important that you don’t neglect the day to day running of your business in the process. Without your involvement, things could take a turn for the worse, ruining prospects of a great sale price. Enlist the services of a business broker or delegate work responsibilities to a trusted deputy. Just don’t try to do everything all by yourself.
Misrepresenting Your Business
Whilst you want to paint your business to potential buyers in the best possible light, it’s best to be 100% up front. If a buyer discovers that you’ve misrepresented a few figures here and there or just exaggerated an upcoming deal that turns out to be a dud, they’ll question your integrity and your judgement. This makes it much less likely that they’ll have the confidence in you and your company required to make a sale. Always be totally honest about your company to avoid wasting time and money on a sale that doesn’t go through.
As with many big tasks in life, when it comes to selling your business preparation is key. Don’t rush into advertising your business until you have covered all of the preparatory bases. Putting in the initial effort will help to make the sale process simpler and speedier.
Audrey Robinson is a business and careers writer, always interested in learning more about unique ways CEOs might use to expand and grow their businesses. At the moment, she is writing on behalf of Datastical, an online knowledge library. Feel free to reach out to her on her Twitter – @AudreyyRobinson.