If you are finally ready to sell your business and move on to the next chapter of your professional career, you likely have a lot of questions. You might not know how to go about this nuanced process or fear making the wrong move. If you find yourself endlessly web searching for “How to sell my business” and you’re not getting the answers you seek, keep reading. We have worked with business owners just like you and can tell you which mistakes to avoid.
Setting Unrealistic Expectations for Your Business Value
It’s normal to have high expectations for the value of your business — after all, it’s something you built from the ground up. However, no amount of emotion, hard work, or loose estimates can truly represent the value of your business. Many business owners overestimate or underestimate the proper value of the business. The only way to get a true handle on the value of your business is to look at the data. Getting the business evaluated and doing an exit assessment can help.
Insisting on Going through the Process Alone
You may think “I started my business, I know how to sell my business!” Although a courageous thought, this often isn’t true. Large companies feature entire departments relating to the sale of the business. When considering a small business, it’s unlikely these departments are feasible. However, there are options for small businesses to handle this process.
You can outsource the work needed to compile important data about your business and get it on the right track. Remember: the sale of a business is time-consuming, and to do it correctly, it will be the work of a full-time job alone. Don’t neglect your day-to-day business operations to focus on the sale; instead, seek professionals who have done this process 100 times over.
Jumping on the First Offer(s) That Lands in Your Inbox
You might be flattered to receive an early offer on your business — often before it’s even officially listed! However, proceed with caution. The first offer is very rarely a good one. An offer made early on does not have to compete with other buyers. You may jump at the chance to get the sale “over with” but resist the temptation. Ideally, you want to compile as many interested buyers and offers as possible, and then assess your options. A simple but effective way to think of this is the rule of supply and demand. With more demand for your business from buyers, the higher it can be valued. A business in high demand will always sell for more!
Fixating on Value Versus Cash
Sometimes, buyers will assess your business at a very high valuation. This can make you feel proud of the work you’ve done but read the fine print. Sometimes, these valuations are not what you will actually be paid for the business. Using strategies like burnouts and seller financing notes, you won’t receive their valuation as payment. Sometimes it can be much less or paid out over a long period. Prioritize the money in your pocket — set goals for how much cash you would like to walk away from the closing table with, and don’t budge.
Not Having an Attorney Present
Legal counsel is expensive and can be another added expense that business owners may hesitate to take on. However, not having an attorney on your side is a mistake. The sale of a business is a nuanced transaction with many people and often changing or confusing terms involved.
Attorneys can help facilitate these major transactions. They look out for language, verbiage, terms and conditions, and other aspects of the deal that you may not be familiar with. Essentially, an attorney will safeguard you from making the wrong decision and ensure your assets are protected.
Selling your business is an important process and it shouldn’t be taken lightly. Avoiding these mistakes can get you on the right track! However, selling your business takes conscientious effort every step of the way — so seek appropriate and professional help. Selling your business will only happen once, so it’s important to get the return you deserve. By following the right steps, you can ensure you get your full return on investment and enjoy the perks of selling your business!