The Need for Cybersecurity When Selling Your Business
When you are selling your business, there are a lot of things to keep in mind. One of the most important is cybersecurity. Why? In today’s world we do a lot of business on the internet, and pass things back and forth digitally. But keeping that information secure is just as vital when selling your business as it is where running it. Here are some things to consider.
The Data You Share
You and your buyer will be sharing sensitive data about both of your companies and even often you will be sharing personal information as needed. You don’t want anyone to get their hands on that data, especially not your personal information. The threat of identity theft is very real.
But it is also about your competitors. You don’t want them to have access to your data, including sales figures, customer lists, and more. Putting it on the web somewhere is a good way to get it taken.
That is why, when selling your business or performing any other transactions of a sensitive nature, the use of encrypted virtual data rooms and even encrypted methods of uploading data is so vital. Password protecting files is important, but it isn’t enough.
It is also important to restrict access to data to only those who absolutely need access. This limits the likelihood of a data breach or leak of any kind.
Rumors and Leaks
Speaking of rumors and leaks, one of the other reasons cybersecurity is so important is that you don’t want your customers and even your employees to know you are selling the business until things are nearly finalized. It can result in employees leaving or being fearful of losing their jobs, meaning a decline in job performance.
It can also make your customers nervous, and reluctant to do business with your company. It is normal to have some customer loss in any transition, but you want to minimize it as much as possible.
The Business Valuation
We have talked many times before about how a business valuation is the first step to selling your business. You can use some online tools to determine a rough value of your business, but you will need a professional business valuation for most banks and lenders, in order for the buyer to get financing.
However, there is a lot of that information that you don’t want to be public information. Competitors could use it against you, and actually it can be leveraged by the buyer during negotiations. It is usually recommended that you keep your business valuation confidential, between you and your business broker and the team you work with.
Rules of the Road
The rules of the road are simple, but they bear repeating before you get too far into the process of selling your business.
- Keep Passwords Private: Never tell anyone your password in order for them to access data and change your passwords regularly.
- Require Strong Passwords: In virtual data rooms and on documents, require long passwords that contain a certain number of characters, a symbol, and a number. The more random these are, the better. Password generators are highly recommended.
- Remember NDAs: Okay, not strictly digital security, but be sure you have policies in place with everyone involved in the sale of the business, so that data is protected.
- Use encrypted devices and transmission when necessary.
One reminder. While all of this may seem a little daunting, digital security is most of the time the best way to ensure your private information stays private.
The Key to Selling Your Business
There are a few simple keys to successfully selling your business. First, you need a motivated buyer and seller. In addition, the faster the deal gets done, the more likely your business will sell. Any breach of security can kill motivation and can seriously slow the entire process down.
Yes, you need to share a lot of data, especially during the due diligence portion of the process, but if you keep it secure and make sure only those who need it have access, your business is much more likely to sell to the right buyer at the right time.
Ready to get the process of selling your business started? If you need a business broker in California, contact us at Rogerson Business Services today. We can guide you through the entire process. We would love to be your business broker.