Selling a business is rarely straightforward. Inbetween negotiations, marketing, internal communications, and liaising with potential buyers, it’s extremely easy to make mistakes which impact the overall value of the sale.
Whilst it can add time in the run up to selling the business, properly preparing means you get a better price, negotiations are often smoother, and common mistakes can be avoided.
If you are considering selling your business, read our blog post to understand 7 costly mistakes that business owners make when selling their business, and how you can avoid them.
- Not Understanding the Value of The Business
Valuations are critical when selling or buying a business, yet many neglect this essential process, instead putting their opportunity on the market for offers straight away.
Without an accurate valuation, you are taking a risk that an offer will be made which correctly reflects the businesses value.
Unfortunately, it’s more likely that your opportunity will attract significantly lower offers, with buyers looking to take advantage of the fact that a valuation has not been carried out.
As well as potentially costing you thousands, failure to have a valuation weakens your power in negotiations, as a buyer is likely to have carried out their own research and may have even had an independent valuation undertaken.
Not only will a valuation help you understand exactly how much your business is worth, but it may also highlight areas where the business value can be increased before going to market.
- Not Marketing or Promoting Their Business
Without proper marketing, you are far less likely to get your business in front of the eyes of potential buyers. As a result, you’ll get less offers and are therefore likely to end up getting a lower figure for the business.
In addition to this, with fewer potential buyers, your business will likely be on the market for longer. This can be restrictive for any buyers that have capital tied up in the business that they wish to release to fund a new venture or retirement.
Given the value of business sales, any costs incurred as a result of marketing will be more than recouped if the business sells for even fractionally more than it would have without marketing.
Take a look at our blog post to find out more about where businesses can be listed for sale.
- Taking on the First Offer
When you get your first offer, it can be tempting to cash in, accept the deal, and take your business off the market. However, unless the sale is extremely time sensitive, it’s usually worth keeping your business on the market whilst you negotiate with the first offer.
As well as allowing time for a potential higher offer to come in, not taking the business off the market means that you won’t find yourself starting from scratch should the first offer be rescinded, or negotiations fall through.
The final benefit of not taking the first offer is that with more than one offer in place, you can leverage them to potentially secure an increased offer from the buyers.
- Not Increasing the Value of the Business
After making the decision to sell a business, it can be the case that sellers lose interest in their business, knowing that it will soon belong to somebody else.
However, neglecting the business in the run up to a sale can actually cost you thousands in decreases to its value.
As well as properly preparing your business for sale, there are several tasks that can be undertaken to increase the value, such as getting your accounts in order, reviewing contracts, and smartening up your company website.
For more information, take a look at our blog post on maximising the value of your business before selling.
- Not Considering the Deal Structure
Deal structuring is a critical part of selling a business, yet many entrepreneurs have never come across the term until it’s time for their business deal to be structured.
With so many different elements to consider when selling a business, a deal structure is an important step that ensures that the buyer and the seller understand their roles and obligations throughout.
The most common types of deal structure include asset sales, share sales, and mergers; each of which has their benefits depending on the expectations of both parties.
To find out more, take a look at our guide to deal structuring when buying or selling a business.
- Trying to Rush the Sale
Selling a business is a process that takes time. From preparing the business for sale and marketing to buyers, through to negotiations and following the legal process to make the sale official, there are several important steps that ensure the sale goes smoothly and you get a fair price.
Trying to rush a sale often leads to mistakes and can also leave you vulnerable to being taken advantage of by buyers who are not in so much of a rush.
Of course, some sales may be time critical and whilst it’s possible to get the process done quickly, sellers may need to accept a lower asking price to facilitate this.
- Not Getting the Right Help
Legal professionals, business brokers, accountants – there are many different professionals that should be involved when selling a business to ensure the sale goes smoothly and the legal process is followed.
Whilst it can be tempting to try and do everything alone, you run a much higher risk of making costly mistakes. What’s more, many buyers will take opportunities more seriously when you have professional support.
Considering Selling Your Business?
At Bristol Business Brokers, we help those that are looking to sell their business find the right buyers and get the best price whilst helping them avoid these common mistakes.
Our proven 5 step approach to selling your business has already helped hundreds of business owners complete successful sales, yours could be next.
To have an honest conversation about how we can get you the best deal when selling a business, why not get in touch today and arrange a time for a coffee and an initial conversation? Call today on 0117 379 0117, or fill out a contact form and we’ll get back to you.