- If you decided that it’s time you sell your business, there are a few things you should know first and foremost.
- Selling a business is not easy. You may be emotionally attached to your project, overvalue it and have high expectation.
- In order to avoid the biggest mistakes while selling your business, find out more about them.
Selling any business isn’t easy. There are emotional, legal, financial and other obstacles that need to be successfully navigated for you to get the most from the sale. Unfortunately, many business owners do not address many aspects of the business until it’s too late and lose on the value of the business they've developed over the years.
Here are five mistakes you should avoid when you’re selling your business.
1. The value of the business is you
Often, the owner of a business can be the reason for the success. In this case, selling the business can be difficult. The value could be your name, your ability or your day to day duties. For example, you could have a lot of authority as an influencer within your industry, being very well known online. This notoriety is based on your name and not your business name. A new owner without the notoriety will have to find other ways to generate sales or business. Most likely having to invest more money than anticipated.
Alternatively, if your business relies on your skills and knowledge for the majority of its operations, a new owner will need to learn the skills and knowledge. If they want, they could hire or train somebody new to do the job.
Remember, if you have built your business from nothing, it’s very likely that you hold much of the value. If you go, the value will too. Therefore, you must ensure the business isn’t dependant on you. Ensure you delegate tasks, promote the business name, train staff and ensure others can fill your role if you leave. Taking these precautions will mean you are prepared for a seamless transition.
2. Expecting more than people will pay
Everyone wants as much money as possible. Unfortunately, the amount you want is rarely what the buyer is willing to pay. Don’t try to value your online business yourself. Get an expert and a realistic dollar value on your business. This way you won’t be shocked when offers start coming in.
As the seller and business owner, your only agenda is selling the business for enough money. Additionally, when you consider how much work you have put into the business, you may feel you deserve more and overvalue. A financial expert does not have the emotional attachment and bias. They will find the right sale price. After they have come up with the sale price, you can determine whether you are willing to accept selling the business for that much.
3. Selling your business on your own
There are many aspects that need to be considered throughout the selling process, legal, insurance, tax, financials and more. Trying to navigate this on your own is not recommended. Also, don’t bring in a family member or friend to do the deal for you. You need expert help. The people at such services have years of experience and are experts when it comes to selling an online business.
A team that is experienced in negotiating business sales and knows the structure of a deal is always best. Mainly, you want somebody who is going to look out for your best interests. What happens if the buyer has an experienced broker and you don’t? The sale will favour them.
4. Focusing too much on the money
Money matters. You have goals and dreams beyond the sale of your business. It could be retiring early or making enough money to start your next business. However, it’s important that you don’t focus too much on a dollar figure.
Consider all the factors of any offer you receive; an offer can be a lot better or worse than initially thought. Think about aspects like financing or employee contracts after the sale. Not all offers are the same, don’t let the dollar amount cloud your judgment.
5. No exit strategy
Before you sell, you must have a succession plan, savings or retirement plan, and a tax strategy. Selling a business will impact your situation significantly so you must plan ahead. You'll be leaving behind what is probably one of the most important pillars of your financial life. That's why it's smart to take extra care in planning the post-sale period where you'll need to get your financial situation in order and decide on the next steps. That situation is unavoidable, and you should prepare a plan for it before selling your business.
Selling your business isn't easy, but there's a lot you can do to manage the process in a way that brings you most advantage and allows to sell your business at an optimal value. Avoid these 5 mistakes and you'll ensure that the process is smooth and successful.