Here are 10 common mistakes you can avoid when you go to sell your business. In today’s troubled environment, buyers are especially skeptical. You can make your business stand out by taking the extra steps named here. Mistakes you want to avoid include:
1) Not committed to the process- are you and your spouse ready to move on? Any partners that need to be convinced? Do you have an ongoing business that is easily identifiable and is legally able to be sold?
2) Poor Packaging of the Business- you’re selling a financial asset. Does it look like one? Will a potential buyer see the dollars that your business generates? Make sure the income and assets are readily recognizable and verifiable.
3) Unsupportable Price for the Business- look at the cash flow, assets and industry to determine a realistic price on your business. Make sure your price is defensible and that you’ve used sound logic and industry practice to arrive at your price.
4) Mis-marketing Your Business- make sure the right people know about your business, understand its value and can get excited enough to contact you. There are other businesses for sale, why should someone buy yours?
5) Wasting your Time with Unqualified Prospects- less than 5% of potential buyers actually buy a business. Of those who did, almost none of them bought a business in the first industry they reviewed.
6) Letting the Business Slide while you deal with potential buyers- remember, you’re selling a financial asset. If your sales or profits drop while you’re managing the sales process, it could impact the value of your business.
7) Poor Sale Management- once you get an offer and agree on a price and terms, the hard work starts. Managing the due diligence process takes time and a proven process.
8) Lack of Flexibility- what looks like a good deal to you might not look so good to a potential buyer. Most business don’t sell, they just close their doors. Keep an open mind to things like seller financing, and different terms to make a deal.
9) Mis-managing Inventory- the buyer expects a certain amount of inventory at closing. You need to make sure the buyer has the right expectations on what is current and what is probably not going to sell.
10) Not using a professional business broker- if you look at the previous nine mistakes, the biggest one could be trying to do it yourself. Your business is a complicated asset that requires a lot of work to generate the most value. You need to run your business till closing to get the most out of it. Use a professional business broker to help you.
Erik Ottem is a business broker in Silicon Valley. He is a certified business intermediary and holds a master of business administration from Washington University in St. Louis. To find out more about businesses for sale or to sell your business go to: http://www.VRsiliconVALLEY.com. To get more articles on buying or selling a business go to: http://www.CenterForBusinessSale.com