3 Pitfalls You Need To Avoid When Selling Your Business

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Here is a guest post written by Deanna Ayres an SEM Strategist and Community Outreach Supervisor at Allegiance Capital Corporation,Growing up in Europe has allowed her a unique insight into cultural differences in business & marketing . Read on to help you avoid these costly pitfalls when selling your valuable business .

Most owners don’t look forward to the sale of their company after so many long hours and days have been put in to build it up. When the time comes, though, it is often surprising how difficult it can be to sell a business for a good price in a reasonable timeframe, especially considering the current market conditions. It’s important to keep your eye on the prize and avoid making some of the most common mistakes out of frustration and impatience.

 

There are dozens of obstacles to overcome in the process of a sale – but here are three that can have the most significant impact on the sale of your business.

1. Insufficient Preparation

Failure to recognize the amount of preparation necessary to sell a business is by far the most common mistake that business owners make. In the same way you would prepare a home before listing it for sale, businesses require similar types of preparation. Organizing financial documentation, handling leasing issues, solving staffing problems and dealing with other concerns should all be taken care of before beginning the sales process. Getting details such as these in order will help to increase the value of the company, creating a price that will make your business command the marketplace. Most brokers recommend beginning the preparation process at least two years before the business is actually listed on the market.

Selling your company is one of the most substantial financial transactions that business owners complete in their lifetime, so take the time to do your homework and prepare your business the best that you can

Failing to prepare all aspects of the business for sales can not only prolong the selling period, it may make the business less desirable for buyers down the road.

  1. Unwillingness to Leverage Professionals

Every business owner is an expert at running their own business but, for some, it is difficult to admit that they are not experts at selling it. Many try to sell the business on their own, attempting to avoid hiring a broker to help facilitate the sale. Of course it would be nice to save the 10% brokerage fee, but brokers have the resources to expedite the process, sometimes lowering the overall cost to you in the end. Instead of continuing to pay rent, utilities, salaries, etc. for the one year it may take to sell the business on your own, a broker may be able to sell it in six months, consequently lowering all of your other business expenses.

In addition to brokers, think about enlisting the help of other professionals such as accountants, lawyers and financial consultants who can assist with various aspects of the selling process.

  1. Failure to Address Transition Issues

For companies that will continue operating after the sale has gone through, it is important to sit down with the new owners to determine the best way to transition. Most of the employees, operation systems and other infrastructure of the company will remain the same, although it will all be functioning under new management. To ease the transition as much as possible, the old and new owners should outline exactly how they see the transition going and what specific steps they can take to make it easier for those involved.

In some cases, the old owners do not want to be involved in the new business. If this is the situation, it can still helpful to discuss the terms of the transition and communicate them clearly to all parts of the business. The important thing is to reach a mutually acceptable arrangement during the negotiation of the sale.

The process of selling your business begins long before it is listed on the market. Remember to start your preparation up to two years in advance of when you want to list your business on the market. Don’t be afraid to enlist help from professionals in the field, including brokers, lawyers and accountants and, finally, consider agreeing to terms regarding the transition from your ownership to the buyer’s. Avoiding three of these major mistakes can put you miles ahead of other businesses and position yourself to be one of the most viable companies on the market.

Selling your company is one of the most substantial financial transactions that business owners complete in their lifetime, so take the time to do your homework and prepare your business the best that you can. Not only will the process go more smoothly, you may have more money in the bank to prove it when it’s all said and done.

 

 

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