There are many things to consider when preparing your business for sale. From finding the right Business Broker and Solicitor (not all Solicitors are experienced to handle business sales), to determining a fair and accurate sale price; there is a list of things you need to do and organise before successfully selling your business. But let’s start with the top 3 mistakes.
With a combined 85 years of experience in the business broking industry, our team are able to notice common and specific issues that should be addressed (and rectified) prior to marketing the business for sale. Here at Core Business Brokers, we’ve identified the top 3 mistakes made in business sales, and more importantly – why they should be considered before the sale process begins. These mistakes ultimately determine the outcome of their business sale and the final selling price. If you’re thinking about selling your business in the next 1-5 years, keep on reading!
Mistake #1: Selling at the wrong time
You’re right. There is no way to truly determine the “right time” to sell your business. Markets fluctuate, pandemics happen, competitors emerge – and sometimes these things come out of the blue! However, if your business is not profitable and your financials and operations aren’t in order – then it’s not the best time to sell. Showing proof of profitability is key to achieving the best possible sale price.
On top of this, prospective buyers will want to walk into a business that runs seamlessly and has their financials in order. Long story short, make everything is tidy and put in the hard work to show continued results before listing your business for sale. Remember, a Buyer is buying future profits of the business and needs to be convinced the business is currently profitable.
Mistake #2: Leading with your heart and not your head
We get it. Most business owners are passionate about what they do and the hard work they have put into the business over many years. For many entrepreneurs, their journey began with a dream and grew into a business. And while this sounds great, it can sometimes stop you from seeing what is in front of you. When it comes to selling your business, you need to remove your emotions off the table and think logically and strategically about your options and decisions and try and put yourself into the position of a Buyer.
This can be a tricky road to navigate for many business owners as they are too emotionally involved to view the process with fresh eyes. This is where our team at Core Business Brokers shine. We bring fresh ideas and a new perspective to the table, allowing you to approach your business sale with a true business mindset, not swayed by your emotional connection to the business.
Mistake #3: Becoming imperative to the business’ daily operations
Many business owners take a full-time role within their business during the establishment phase. They wear many hats and complete many tasks, both to save money while the business finds its feet and because no one else has the same investment in the business as they do. However, as the years progress it’s important to gradually step away from the business (not necessarily entirely), allowing other members of the team to learn and grow and run the day-to-day operations without you.
This proves to potential buyers that they can take over and the business will continue to run as it does presently i.e. ensure that the Goodwill of the business does not rely solely on you, the owner. If your business cannot run without you, and you want to leave… think about what that would do to your business and how any Buyer would see this as a huge risk.