Irrespective of the type or size of your business, or the reasons as to why you’re putting it up on the market, if you plan on selling your business, you ought to do it right. Yet, people sometimes take this matter very lightly.
As far as these people are concerned, selling a business is no different than selling a product online. However, approaching your business for sale, just as you would for a normal product or service, can prove quite costly. People make a lot of mistakes while selling their businesses. Among them, the 4 costliest ones are discussed here.
#1 Planning too late
Selling a business requires a lot of planning. From working out the value and worth of your business to settling legal obligations before you can put it up on the market, you need to do all that and a lot more before you can actually sell or even list your business for sale. These things take up a lot of time, and hence, you need to start planning early.
On average, it can take a minimum of 6 months to sell a small-scale business. Sometimes, however, it can take much longer, like a year or more, especially in the case of big businesses. Thus, whatever you do, don’t start planning the sale at the last moment. If you’ve had the opportunity to think things through, and are eager to sell, you must start planning immediately.
#2 Not analyzing the business value properly
Failing to do a proper valuation of your business before selling means that you’re likely going to incur a loss. Once again, no matter the size of your business, you can never put the right price on it without running a proper valuation.
Some people tend to set estimated prices on their businesses based on hastily done valuations. As a result of this, they might forget to take key factors or elements, which can increase the overall value of the business, into account.
Besides, buyers are always going to ask for a valuation report on your business. To them, this report is proof that your business is indeed doing well financially. Hence, you need to make sure that you’re taking all your business assets, earnings, and other factors into consideration while conducting the valuation.
#3 Not pre-qualifying your buyers
As much as you’d want to avoid unqualified buyers from approaching you and your business, they’re eventually going to show up. Out of common courtesy, you can’t just tell them to go away. However, you can always avoid going into detail about the business with them, but even if you do, they’ll still be hogging up your time, which you could’ve spent talking to qualified buyers.
Hence, you need to pre-qualify your buyers. This means that instead of taking or listening to proposals from everyone interested, you’ll create your own shortlist of potential buyers, who’ll be referred to as qualified buyers. Sometimes, sellers create this shortlist before sending out the advertisement for selling the business.
The potential buyers or qualified buyers will have to meet certain criteria, which will of course be set by you. Without pre-qualifying, you’ll have to deal with a lot of unqualified buyers before you can find the right person to sell to. And even after wasting your time and effort on all these people, there’s no guarantee that you’re going to find a buyer who’s actually interested and qualified to buy.
#4 Thinking you can do everything on your own
Selling a business is not an easy job. It takes time, effort, resources, and a lot of patience. You can’t do or manage all this on your own, especially if you’re having to look after the business at the same time.
Business brokers are there to make your life easier. They’ll handle everything needed to sell your business. From running a business valuation to finding and pre-qualifying buyers, these people will get everything done for you at a small price. Yet, just to save this small amount of money, people tend to do everything on their own and fail miserably at doing so. Not only do they fail to land a proper buyer or price for their businesses, but in the process, they end up wasting a lot of their own time which could’ve been utilized elsewhere.
Hence, if you’re not confident enough or don’t have the time to manage the sale of your own business, get professional brokers to help you out.