Selling Your Business – Avoid These 5 Mistakes
Over the years I’ve seen consistent mistakes made by business owners who are trying to sell their business.
A business that ends up not selling is often the end result of these mistakes.
The following are my TOP 5 mistakes to avoid when selling your business. 5 mistakes many business owners consistently make when trying to sell their business.
To be clear, there are literally dozens of mistakes a business owner can make before and throughout the business selling process that can and will effect the sale of their business. I’m going to discuss 5 common mistakes that I consistently see business owners make, who are trying to sell their business.
1. Listening to inexperienced people.
The fact of the matter is VERY few people have “hands-on” experience buying and selling businesses. Yet there are many in-experienced people out there who feel they can comment on such matters. Many of these in-experienced people are simply “dream-killers”. They take inaccurate information and talk about it as if they know all about the subject of selling a business. I’ve seen business partners do this, “friends” do this, lawyers do this, accountants do this and real estate agents do this.
Listening to inexperienced people has terrible consequences.
The fact is, it is the Business Broker who has the “hands-on” experience to help guide you and provide you with expert advice specific to selling your business.
2. Not understanding that YOU effect a buyers ability to get financing!
In the likely event a buyer needs financing in order to purchase your business, you need to understand that YOU have a direct effect on wether a buyer will get the financing that they need in order to buy your business.
You need to understand that “typically” a lender will do more of an analysis on you and your business than most buyers.
If they have any concerns about you, your business or the longevity of the business under new ownership – the buyer will not get the financing they need in order to buy your business. Before you even list your business for sale, you have to know if you have a Sellable, Financeable, Business.
3. Hiring a Lawyer BEFORE you even know if you have a deal in place with a buyer.
One common way for a seller to rack up thousands of dollars in legal fees is to hire a lawyer before they even know if they are talking to a serious, qualified buyer, who has the financial ability to complete the transaction.
Take my word for it, if a buyer is waffling about engaging their lawyer, if they are waffling about paying a meaningful deposit, then I would suggest to you that this is a BIG red flag. You should therefore not be racking up you own legal fees!
Remember, actions speak louder than words.
4. Not Following A Proper Process.
Selling a business is a process, not an event.
There are specific steps that should be followed before and throughout the process of selling the business. For example, certain business information should only be released once certain events have occurred. The Due Diligence phase of the business selling process for example MUST follow a specific sequence of steps.
Missing a step, inadvertently by-passing a step, can destroy any hope of you selling your business. Furthermore, it can leave your business in shambles, from poor moral to employees leaving through to your competition taking advantage of the fact it is now public knowledge that you are trying to sell your business. It might take you years to rebuild your business to its former glory.
Recommended Resource: “An 18 Step Comprehensive Guide To Selling A Business“.
5. Not engaging a suitably experienced Accountant.
Forget Legal Fees, forget Business Broker Fees, forget these fees combined! The one thing that will have the BIGGEST impact to what ends up in your pocket, is TAX. If you do not have an accountant who is experienced in tax mitigating strategies such as your Lifetime Capital Gains Exemption, then you risk un-necessarily throwing away tens of thousands, even hundreds of thousands of dollars, in tax.
Let’s review and summarize the discussion.
In this article I’ve discussed just 5 business owner mistakes when it comes to selling their business. Just 5 reasons why businesses do not sell.
I can give you a list of more than 80+ other reasons why most businesses will not sell.
If you are thinking of selling your business, I implore you, read about my course: The 8 Elements Approach To Selling A Business.
- I’ll show you exactly what you need to do in order to properly prepare for the sale. What you need to do in order to have a Sellable, Financeable Business.
- I’ll show you exactly what you need to do in order to identify a suitably qualified buyer,
- I’ll show you exactly what you need to do in order to co-ordinate all the activities needed in order to sell your business in a timely, cost effective manner.
- I’ll save you tens of thousands of dollars in fees.
- With my help you’ll be putting the most amount of money in your pocket.
Thank you for taking the time to read my article on Selling Your Business – Avoid These 5 Mistakes! My hope is it will show you how to sell a business the right way.
If you enjoyed reading this article and found it helpful and informative, please do take a moment to Comment & Share! Doing so really will help me get my message out to other people just like you, who are searching for such expert advice.