Running a business is never easy but selling a business isn’t easy either. Selling your business is a big step and requires a lot of preparation and thought. Many companies make mistakes when they try to sell their business. Whether you are planning to sell your company or you know that you will need to sell your company in the near future, there are some mistakes you can avoid making. Here we’ll discuss five of the most common mistakes that are made when selling a business and how you can avoid them.
1. Failure to determine the value of the company
Valuation is the process of figuring out what something is worth, especially something that is being bought and sold, such as a business. Valuations are particularly important in business sales because they are an integral part of coming to an agreement between the buyer and the seller.
Valuations are needed for a variety of reasons. When a company is sold or merged, the valuation is a critical part of coming to an agreement. The valuation can determine the sale price or the amount of money that the owners expect to receive. It is also an important tool for investment and lending decisions. Valuations help to attract investors by showing the investor how much the company is worth. A valuation is also a good tool for lenders. Lenders can use the valuation to determine the loan amount. A small business can use a valuation to determine how much it can reasonably borrow to help grow the company.
2. Talking to a sole buyer only
Before you enter negotiations with a buyer, it’s crucial to have at least three interested in the business that you’re selling. This is said to be the sweet spot. This way, you will have the ability to make a counteroffer if you aren’t happy with the buyer’s offer. This is also a good way to make sure that you’re getting a fair price and that the deal is done amicably.
When negotiating with only one buyer, keep the terms private. If you’re able to find others interested in your product or services, you’ll be better positioned to negotiate. The reason for this is that other parties can act as a check on the original terms. For example, if the price being offered is too high, the potential buyers will likely be able to vouch for a better price. It’s important that all parties get what they want from the deal, but not at the expense of another party.
3. Impulse selling
Selling your business quickly can be an impulse decision, but there are ways to make sure that you’re not making too quick of a decision! First, do your research. Is the company in a high-growth industry? That may be a sign that you should wait until the business can grow properly. Next, is there a need for this service/product? Is it practical for your current customers? It’s important to make sure that the business you are selling is in a strong market and that you’re not going to be selling it into a market that is too saturated! There are several other factors to take into account, so it’s important that you do your research before selling your business to make sure you’re getting a fair price and that you aren’t selling too quickly!
Removing the emotion and pressure from the process of selling a business is not easy, but you can do it! A lot of people make the mistake of selling their business too quickly or without knowing who they’re selling it to. You need to understand how you’re going to sell a business before you do it. If you don’t, you might end up with a bad deal that leaves you with a lot of regrets. Writing down your goals and plans will help you think about them more clearly. When you have a plan, you can be sure you’ll end up with a satisfying result.
4. Not negotiating with the buyer
One of the biggest mistakes business owners make when selling their business is not negotiating with the buyer. They often just decide to sell the business and accept any offer without negotiating. This can be a huge mistake because you don’t want to just accept any offer (unless you really don’t care how much you sell for). Instead, you want to get as much money as possible from the buyer you’re selling to. You could be walking away with a lot less money than you could have.
If you’re planning on selling your business, then you might think the only thing you have to do is advertise it and the offers will come rolling in. Unfortunately, this just isn’t the case. When selling a business, you have to put yourself in the mind of the customer. They have their own reasons why they want your business. It is a good idea to meet with the potential buyers before agreeing to sell. This will give you a chance to negotiate the price they’re offering and see if there are any parts of the business they really want. Simply put, don’t just sell the business to the first buyer who comes your way.
5. Not seeking professional help
There are certain types of businesses that are more difficult to sell than others. If you’re planning on selling your business at some point, you should know these different industries and why it can be more difficult to sell a business within them. Just because you have been working for a company for a long time, doesn’t mean you know everything there is to know about selling. Being in the business world for over a decade does not make you an expert. The world of business is ever-changing and knowing what not to do can be just as important as knowing what to do. Your business is important, don’t risk it by failing to seek thorough business advice and proposals from professionals you trust.
When selling your business, you’ll be presented with a lot of options. How much to sell it for, who to sell it to, what to sell it for, where to sell it, etc. It can be so easy to get lost in the mire of the selling process and end up making expensive and potentially cost-ineffective mistakes! By seeking the advice of a business advisor, you’ll be able to take some of the guesswork out of the process and you’ll have someone there to help you through the whole process.
When you are selling a business, you need to be cognizant of the fact that it is a lengthy and complex process. However, if you are prepared and are able to be patient throughout the process, you will end up with the best outcome as a seller. You should always be ready to provide information on your business and the appropriate financial documentation. You will also need to obtain sound business advice from business brokers that you trust along the way to be sure you are getting the best possible deal. As a sale of a business is a big transaction, it should be treated as any other big one. The sale starts with the preparation and ends with the closing, but there is a lot of action in between.
Have you been thinking about selling your Coachella Valley company? We can help you figure out what it’s really worth. For many years, our confidential talks have helped countless business owners sell their companies for great sums of money in a matter of months. Here at Transworld, we have access to a wide variety of information that can help you start negotiating and even make your business’s value soar within months. Contact us today and hear it from one of our professional business brokers at Transworld Business Advisors!