Deciding to sell your company is a big decision and you want to do everything you can to get the best deal possible. You don’t want to make any hasty decisions. The most successful sellers are very organized and meticulous in their pre-sale preparation. As you prepare to sell your business, put your best foot forward and avoid these common mistakes:
1. Not Being Prepared
Preparing to sell a business takes a substantial amount of time and effort, from determining the value and setting the asking price, to gathering financials and other important documents. It’s recommended that you start preparing at least six months to a year in advance of putting your business on the market – preparing several years in advance is ideal. Allowing this extra time gives you the opportunity to increase earnings and improve your company’s competitive position, which in turn adds value to your business.
2. Having Unrealistic Expectations
Many sellers often believe their business is worth more than its actual market value and then become disappointed when it doesn’t sell quickly at their asking price. As you prepare to sell your business, evaluating recent sales of similar businesses in your area will give you a sense of what the average selling price is for a business such as yours.
BizBuySell’s valuation reporting tool gives you access to over 68,000 sold businesses and 45,000 businesses currently on the market. It not only allows you to analyze sold businesses similar to yours, but also determine a fair asking price. Additionally, it’s also important to consult with an expert, such as a business broker, to identify the types of concessions sellers or buyers have made in order to close the deal.
3. Setting the Wrong Asking Price
Determining an accurate selling price for your business is not a simple task. It’s quite common for business owners to overvalue their company and then become disappointed when it doesn’t sell. Yet, it’s just as damaging for business owner to undervalue their company. Don’t leave money on the table by asking too little for your business.
Using a valuation tool is a quick and easy way to get a sense of the market value of your business, but it’s best to get a professional valuation from a qualified third party. You’ve poured your heart and soul into this business, and in the end, it pays to get an accurate assessment. Business brokers and professional appraisers who provide valuation services understand the marketplace and can more accurately measure the value of your business.
4. Trying to Do Everything Yourself
One of the most common shortcomings of business sellers believing they can do everything themselves. It’s very rare that a business owner is qualified or experienced enough to sell a business without the assistance of outside professionals. In order for the sales process to go smoothly without any glitches, it’s wise to get assistance from experts such as accountants, attorneys, business brokers, appraisers. Getting a professional assessment of your business and determining what needs to be done before putting it on the market should be one of your first priorities.
Business owners who plan their exit in advance, in a systematic and organized fashion are more likely to maximize the value of their business, streamline the selling process and ultimately receive a higher asking price. BizBuySell’s blog article, “Add Value to Your Business Now: Keep Good Financials Beyond Tax Season” offers more details on preparing your business for sale, including keeping strong financial records and compiling certain documents for would-be business buyers. Preparing your business now will go a long way when it comes time to sell in the future.