Let’s face it; businesses, much like life’s sweetest moments, aren’t eternal. A myriad of factors may inspire you to part ways with your enterprise. It’s not so much a case of “if” you’ll say your goodbyes, but more about the “when” and “how.” Exiting your business, particularly by selling it, is as common as it is complex.
It’s akin to starting up, laden with a unique set of hurdles; from sprucing up your business for prospective buyers, defining its worth, to finally ringing the closing bell. Yep, you’ll find yourself navigating through a sea of questions, but hey, isn’t that part of the thrill?
It’s a good thing that there are professionals like Lloyds business brokers who can help you along the way. While every business sale is unique, certain pitfalls tend to be common among all sellers.
The Trap of Lack of Preparation
Falling short on preparation can be a costly mistake when selling your business. It’s akin to showing up for a marathon without training – you’re setting yourself up to struggle and potentially lose out. It’s essential to groom your business for the spotlight to ensure maximum returns. Think of it as a beauty pageant contestant, needing some polishing and primping before taking the stage.
If you see the sale of your business looming on the horizon a year in advance, use that time wisely for the necessary preparations. Most buyers are on a hunt for a business they can take over seamlessly without having to start from scratch (if that was the case, they’d just embark on their own venture).
A few strategies worth considering include training your staff to ensure they can keep the ball rolling under new leadership, creating comprehensive manuals, and tweaking your systems for efficiency. Remember, nobody wants to purchase a sinking ship, so make sure your business is in shipshape before the proverbial transfer of the baton. Your goal – a thriving business that won’t miss a beat even after you’ve stepped aside.
The Perils of Procrastination
Procrastination can be your worst enemy when it comes to selling your business. Most small business owners don’t have a line of succession, so if there’s a hint of upcoming personal circumstances that might make running your business difficult, it’s time to gear up for a sale. Holding off until you’re hard-pressed for time isn’t a smart move. That’s like trying to sell your house in a downturn market – you’ll likely get lowball offers instead of the premium price you deserve.
Keep in mind that your business’s worth is typically pegged on your earnings multiples. So, if you twiddle your thumbs for too long and your profits take a nosedive, well, your business valuation plummets alongside. Fair warning – don’t wait until the eleventh hour!
Beware the Broker Blunder
Choosing the right business broker can truly make or break your sale experience. You wouldn’t hire the first real estate agent you bump into to sell your home, would you? So why do the same with your business broker? Selecting a broker without careful consideration could result in a massive financial loss. Remember, it’s not a game of eeny, meeny, miny, moe.
Don’t entrust your business sale to a broker who is content to sit back, kick their feet up, and wait for your business to sell itself. Seek out a proactive go-getter who thinks outside the box when it comes to marketing and selling.
Before you sign on the dotted line, be sure to choose your own mini ‘The Apprentice’ style interview process. Grill potential brokers on their selling strategies and compare their fees. Your aim? To secure a broker who will help sell your business at the best possible price. Your broker choice is just as crucial as the decision to sell, so choose wisely.
The Fallacy of the Silent Seller
Sitting back and believing that your chosen business broker will handle every aspect of promoting your sale can be a dangerous assumption. It’s fantastic to have a broker on your side, but remember, no one knows your business better or feels more passionate about it than you do. Your broker will certainly drum up interest, but your involvement in promoting the sale is equally crucial for its success.
Utilising platforms like Facebook Marketplaces, Gumtree, and relevant groups are great starting points – never underestimate the power of your personal network and the invaluable knowledge you bring to the table.
The Pitfall of Price Misjudgment
A word of advice to steer clear of a common snare: don’t overestimate or underestimate the worth of your business. If you’re a fan of “Shark Tank,” you’ll know entrepreneurs who demand a king’s ransom seldom walk away with a deal, while those underselling themselves risk getting short-changed. It’s crucial, then, to roll up your sleeves and dive into the nitty-gritty of valuing your business.
Approach this task with a level head, devoid of bias and sentiments. Once you’ve arrived at a fair price, it’s savvy business to pad your asking price slightly, giving you room to negotiate without feeling short-changed. However, don’t let ambition cloud your judgment and inflate your price excessively just because of the blood, sweat, and tears you’ve poured into your venture.
Setting an astronomical price tag not only prolongs the sale process but can deter potential buyers, leaving your business gathering dust on the shelf.
The Hazard of Hastily Accepting Any Offer
Don’t fall into the trap of selling to a buyer simply because they’re the first one to make an offer, particularly when you’re in a pinch. This route may seem tempting, but it pays to exercise patience and tenacity. On occasion, a potential buyer might dangle a lucrative offer, but with a catch – they want you to finance them.
Selling your business for a hefty sum, with minimal upfront payment and a long-term contract, can be a risky wire-walk. There’s a chance you could lose everything. The golden rule here? Always weigh your offers based on the risk-to-reward ratio. It might take more time, but it ensures you secure a deal that’s both profitable and secure.
