Are you considering retiring or trying something else for your career and putting your business up for sale? Before you do, learn the common mistakes to avoid when selling your business to find buyers and ensure a smooth negotiation and transition period.
Insufficient Preparation
Every small business and private practice owner should know that preparation is key in everything you do, from formulating a new sales strategy to selling the business. Selling your business isn’t as simple as putting up a “For Sale” sign and waiting for the offers to come in—you need to prepare your financial and legal documents.
You should make your financial record-keeping and reporting organized, transparent, and easy to evaluate and understand. The last thing a buyer wants is to purchase a business with accounting records that are a headache to organize and understand. Plus, messy financial records can look shady to a buyer, so sellers should first prepare and organize their record-keeping for potential buyers to review.
Selling Low
Another mistake to avoid when selling your business is trying to sell and get a fair offer when your business’ value is at its lowest. Sometimes, circumstances dictate that owners have no choice, but if you can, you should never sell when your revenue is down. If your profits and revenue are slumping, but you think they’ll rebound, wait until they do instead of trying to convince a buyer they will.
Making It Public Too Early
When selling a business, you should keep news of the sale on a need-to-know basis for potential buyers and employees. Confidentiality is important when selling your private practice or business as it preserves your negotiating position, protects sensitive information, and ensures no staff exodus. When hearing their boss may be selling, many employees will look for a new job or decide to retire of their own accord. This will make your business seem unstable and hurt its value to a buyer.
Doing It All Yourself
You may have built your business from the ground up on your own, but when it comes to negotiating and selling, you’ll want some help. Selling a business is much different than running a business, and it’s best to have professionals with you to take care of the particulars and the heavy lifting so that you can focus on running your business to its maximum potential and value.
A business broker has much more experience in the market and can connect you with potential buyers much quicker and even help with negotiations. It may mean paying more, but these professionals will smooth many wrinkles that come with selling a business.
Conclusion
Selling a business is hard, but following these simple tips can make life easier for you, potential buyers, and your employees. Prepare yourself and your business when the time is right, keep it to yourself, and enlist some help to find the right buyer.
