You may have finally made up your mind to sell off your business either to retire or to venture into another one. Whatever be it, you have invested in lots of time, energy and money into this business and should derive profits from its sale. But selling a business is not an easy task. A good number of entrepreneurs are noticed to make costly mistakes while selling off their business. Hence, to ensure success of sale made as well as to preserve peace of mind, you need to follow some expert tips.
Mistakes to Avoid When Selling your business
Being confident is good if you are able to negotiate successfully the deal and fetch good price. It is necessary to understand that the real world valuation rather is dependent on quantifiable criteria and not our personal worth estimation. This is a mistake that you should avoid. For this, you are to derive objective 3rd party valuation. On identifying appropriate business valuation, you should address the issue which might result in value increase.
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2. Insufficient preparation:
The common mistake committed by many is lack of preparation. Several key aspects associated with your business should be addressed before listing it at the marketplace for sale. Sustainable profitability, financial documentation, staffing problems, lease issues along with other concerns it likely to impact salability and price. ‘Right now’ is rather the perfect time to prepare to sell off your business. Brokers generally recommend their client to start their selling preparation process minimum two years before getting their business listed.
3. Hands-off approach:
This is something that you should avoid in selling Your work does not end with the hiring of a broker, even an experienced one. You can expect your broker to market aggressively your business to potential clients. But it is you who possess in-depth knowledge about your business. You should immediately discuss with your broker and find out how proactively you can market your business together. If the broker manages to identify few qualified buyers, then you need to try to motivate the buyer to purchase your business. Proper and timely interaction with potential buyers is sure to have a significant impact on their confidence and enhance sales prospects.
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4. Not willing to leverage professionals:
You need to understand that you are best at managing your business and not selling a business. Hence, it becomes essential to hire the brokers who can successfully expedite the selling process. Unfortunately, this is something that many business owners fail to understand. The brokers will charge a fee of 10% for their service. In several cases, they have managed to add minimum of 10% to 12% to overall sales price. On hiring, the broker will help manage several vital tasks. It includes preparation, exhibit your business to all potential buyers, promote, market as well as engage in negotiation. Also try to leverage the experience and expertise of other specialists like financial consultants, lawyers, accountants, etc. when deemed necessary.
5. Unable to pre-qualify buyers:
This is another area that you may avoid in selling your business. Early prospective buyer pre-qualification is vital to ensure successful business sale. What you need to understand is that pre-qualification helps attract prospects to enter into a sale. Moreover, early pre-qualification also safeguards your company’s sensitive information. The details concerning your sale will be provided only to serious buyers. The standard requirements that prospective buyers would be interested to avail are your company’s financial background information and confidentiality agreements.
The above are just a few of the many Mistakes to Avoid When Selling your business. The right choice will enable you to derive profits from the sale.