Many entrepreneurs eventually find themselves asking the same question: how can I sell my business? But selling a business can be a tricky thing. The practical difference between success and failure can often be significant – just a few tiny miscalculations can result in vastly different outcomes. Plus, selling a business is something that most of us do only rarely, and as such, it is not something that you are likely to build up expertise in.
For this reason, it’s important to think proactively about the mistakes that you risk making, and make a conscious effort to avoid those mistakes. Let’s run through a few of the more common ones.
Just as you might give the walls a coat of paint before selling a house, it’s worth giving your business some attention before you proceed with a sale. If there’s litigation pending, then resolve it. Make sure that the accounts are organised nicely so that a prospective buyer can see that everything’s in order. Make sure that the business can operate in your absence.
Lack of Appropriate Representation
If you don’t have a skilled person acting as the front-end of your company for prospective buyers, then you stand to lose out. They’ll need to be knowledgeable, approachable, and proactive. They also need to be available at times that suit your prospective buyers. Great sales and negotiation skills are essential. For all of those reasons it can be well worth engaging a specialist to front promotions and sales for you.
If your valuation is off the mark in either direction, then the sale won’t go well. Either the buyer will immediately accept the undervalued business, or they’ll pull out, causing unnecessary delay. Either instance can be disastrous for different reasons. For this reason, it’s often worth getting an impartial auditor in to work out exactly how much you should be charging from the very start.
Remember that your advisor will only provide you with a range of values to work with, and so you shouldn’t take their word as gospel – the business is ultimately worth what the market will pay for it.
Advertising the Sale
If you aren’t approaching the right kind of buyer, then you risk causing yourself problems. It’s generally a bad idea to advertise that your business is for sale, as this can affect the confidence of consumers and suppliers. This reputational damage can be crippling if the sale doesn’t go through for any reason – as the failure will be looked upon, fairly or unfairly, as a reflection of the true value of your business.
Being less than honest
If you aren’t upfront with your would-be buyer, then you might find yourself in legal difficulty after the sale, when the details of your deception become clear. It’s better to mention problems and provide context than to conceal them outright. This applies especially to things like taxation, or impending strike action on the part of your employees.