09 Oct Around the Web: A Week in Summary
A recent article from BusinessBroker.net entitled “6 Common Mistakes to Avoid When Selling a Business” explains six ways in which business owners could better prepare themselves for the sale of their business by avoiding certain actions.
While it may seem like an overwhelming undertaking to sell your business, it doesn’t have to be. And regardless of when you plan to actually sell, it is never too early to begin preparing to do so. Once you do make the pivotal decision to sell, be sure to avoid these 6 common mistakes many business owners make:
- Failure to prepare the business for sale – Potential buyers most commonly want to acquire a business that they don’t need to overhaul before they can begin running it.
- Asking for the wrong price – A valuation that is too high can create problems during negotiations or scare away potential buyers from the start. A valuation that is too low however, leaves money on the table.
- Not utilizing the experience of professionals – Selling your business is not the time to be a do-it-yourselfer. Save your entrepreneurial skill for running your business and allow yourself to rely on professionals to walk you through the sale process. Shouldering too much and trying to do it all can be detrimental to the value and health of your business.
- Spending time with the wrong buyers – It’s tempting to focus energy on the first person to show interest in the business. However, a lot of time stress and headache can be saved by properly vetting all potential buyers.
- Not maintaining confidentiality – Employees and customers learning about a potential sale too soon can potentially damage the business and its value.
- Not addressing post-sale transitions – Make sure you are comfortable with the transition plan before you accept the offer.
A recent article from Certified Business Brokers entitled “Will It Sell?” discusses the factors that cause a business to be considered non-saleable.
Business brokers and advisors frequently decline to take on a client because the business in question is what they consider non-salable. Giving that their job is to sell your business, it is a practice of integrity and ethics on behalf of the advisor to turn down a sale that they cannot make. Owners should be aware of what makes their business considered unsalable and prepare their business for the process before seeking out an advisor. Some of these things include:
- Having too high of expectations for a sale price
- Declining sales trends
- Dated business practices
- High customer concentration issues
- The business being dependent upon the current owner to run
- Messy or incomplete financial books and documents
Many of these items, if caught soon enough, can be repaired before going to market. However, it is a poor decision to take a business to market that has any of these red flags as they can seriously slow down the deal process. It is a common saying in the industry that “time kills all deals”. An advisor is well suited to help you prepare your business for sale if you are willing to put in the proper time and energy into creating a sellable business.
A recent article from Exit Oasis entitled “I Want to Sell Someday… Can a Buyer Duplicate My Results?” explains the difficulties with having an owner-dependent business and explores potential solutions.
It can be tempting to do everything yourself as a business owner. The phrase “if you want something done right, you have to do it yourself” drives many entrepreneurs. However, when it comes to selling your business or building something sustainable, this mindset can cause more problems than it solves. Ultimately, if you’re the reason your business is still running, how is someone else supposed to run it? Alternatively, by building a reliable, well-trained team that can carry out day-to-day functions you create a much more scalable, sustainable and sellable business. This requires some letting go and trusting, but the payoff is worth it in the end. The other option is to build systems that meet the same purpose.
While it may not feel great to think of yourself as replaceable, if you want to sell your business you need to be. If another person cannot step in and duplicate the results that you’ve been able to achieve, then your business holds little to no value from a sale standpoint.