5 Mistakes to Avoid When Selling Your Business
Mistake 1: Not Planning Ahead or Waiting Too Long to Sell
Waiting too long, or not planning in advance, can cause many business owners to miss their window of opportunity. It takes an average between four – six months to sell a small business. Therefore, long term planning is key to any successful business sale. By keeping updated records, a detailed business history and sales portfolio on hand at all times, it will make your planning pay off. If a buyer can see you have been planning and considering this for quite some time and that it’s not a quick “I’ve had enough” sale, your sale price is likely to be much higher.
Mistake 2: Not Finding the Right Broker to Represent Your Business
Finding the right business broker to sell your business is crucial to your success. Often business owners go with the first person they meet just to list their business and get the process going or they go with the broker who promises them a high and unrealistic price backed with no evidence as to how this will be achieved. This can cost you time and money in the long run. Within a few months, you may see no results and have to go on the search all over again. Taking the time to understand what a realistic market value for your business is based on your net profit, lease and fit out will get you going in the right direction. At jbb. we keep it simple. We give you an honest appraisal of your business value in the current marketplace and most importantly we don’t list businesses we can’t sell.
Mistake 3: Thinking You Don’t Have to Promote or Market Yourself
Thinking a broker will do all the work in promoting your sale can be deadly. You are the best promoter for your business. Who knows your business better than you? No one is more motivated, passionate and knowledgeable about your business than you. A broker will be generating market activity, but it’s important that you continue to promote you/your business as well as you will have buyers visiting the business to see it in action, so you need to be putting on your best performance.
Mistake 4: Asking Too Much or Too Little for the Business
Setting a very high or unrealistic price tag on a business can lead to a dead-end street. Expecting to get top dollar for a business that generates little or no profit is simply using bad business sense. Consider your industry, similar businesses, the economy and your marketplace when pricing your business to sell.
On the other hand, a business that does not generate profits may do well with a WI/WO (Walk In Walk Out) sale. Too many business owners that have not turned a profit, or have cash flow problems, miss this wonderful opportunity. Some reasons they miss out is due to lost energy and/or motivation or because they may not want to admit defeat or failure. Another mistake is to price the business too low. Often business owners will price their business low because they are burned out, suffer from an illness or did not get good advice. Do your homework first. Listen to your brokers, see what else is on the market that is comparable to ensure your business is priced correctly.
Mistake 5: Spring Clean Your Business – All Year Round
So many times, a broker can walk into a business for an initial consultation with a vendor and the cleanliness of the business is horrendous. Think of your business sale as you would a property sale. If you are selling your home you take the time to give it a “Spring Clean”, a quick paint job, fix the gardens or even hire a stylist to come in to decorate the space to make it more attractive to a buyer. Apply this same principle when selling a business. If you run a café, restaurant or bar, give the kitchen a good clean before you go on the market. Similarly, if you run a retail shop, gym, or wholesale business, clean up the space and tidy up any storage areas. Make the business as attractive to a buyer as possible so they fall in love with the idea of running it, even before they look at any financials.