Selling a business is not easy. Many things can prevent a Buyer from considering your business, so you’ll need to market it well. Here are five common mistakes and how to avoid them.
1. It is unclear exactly what is for sale.
When you sell your business, what is included? Are you selling your name and phone number or including all your equipment and assets? A Buyer will want to know all of these things. Make a list of all the fixtures, furniture, and equipment that accompany the business.
If any items are not for sale, make sure this is stated clearly at the first meeting and why not. Preferably remove the items entirely from the business. If vehicles are included, ensure they are roadworthy and have smog clearances. Know their value.
To do: Clarity is essential. Make your sales intentions clear.
2. Failure to explain the real value of the business opportunity to the Buyer.
Buying a business is a big decision at the best of times, and it’s critical to be transparent about the business being sold, its financial performance, its history, the types of customers that buy from the business, the number of employees and their roles, and so much more. If the sale includes real estate, check the title to make sure the scope of the property and its value are clear.
- Do any of the buildings need repair?
- Are the fixtures in good shape and operational?
- Would painting the business or cleaning things up improve the presentation?
Know what your business is worth, but be sure you can prove it to the Buyer. Otherwise, you may not receive the offers you are looking for.
3. Failure to follow through with an interested Buyer and keep the process moving forward.
Time kills all transactions. Ensure everything is in order and readily available so the process can continue. This is why hiring a Business Broker early in the process is critical. They will ensure that your business is ready to sell before it goes on the market and that due diligence keeps things moving forward.
If you have a Buyer on the hook, and they are interested in your business, you must keep them interested until the sale is complete.
4. Telling the Buyer they are incompetent or don’t know what they are doing.
This should be common sense, but unfortunately, it is not. Sellers often are still too attached to their business and their “baby” and don’t want to let it go, or they feel like the interested Buyer will not know how to run their business.
Nothing will kill a deal faster than making accusations against the Buyer or being rude. Besides, it can even cost you business and current customers, especially if that person is in the same or a similar industry. Be careful, and treat your Buyer like a customer. Because they are one.
5. Selling when you shouldn’t.
Some sellers try to sell a business when they run out of energy, are distracted by personal problems such as a divorce or medical problems, the business is not performing at its best due to the economy, or there has been a shift in the economy that reduces the demand for that service.
There are many other reasons, but to increase your chances of selling, make sure there is a compelling reason to expect a Buyer to buy the business. If things are not going well for you, why would that change under a new owner? Other exit strategies may make more sense if you cannot sell now.
Are you thinking about selling your business? Would you like to know its value? For more information, please visit my website, Business Valuation.
If you need more immediate help, you can email Andrew Rogerson or call me at 916 570-2674.
