Updated: July 17, 2023
For a long time, your small business has played a significant role in your daily life, so when you list your business for sale, it is essential to remember you’re not at the finish line just yet and that mistakes can still be made in the process.
With the goal of a successful business sale in mind, we’ve outlined 5 Mistakes to Avoid When Selling Your Business to avoid costly mistakes so you can prepare your business and yourself for the process.
Selling On Your Own
One of the biggest mistakes to avoid when you sell your business is to try and manage the process alone.
A business broker is better equipped to sell your company for a few reasons. First, they’re professionals and understand the process from a bird’s eye to the most minute details. Details include the legal consequences of a business sale and how to ensure the process is completed without the possibility of repercussions.
Second, business brokers have the time to devote to your sale and access to buyers and professionals to get your business to the closing table. They’re also experts in financing options and negotiations, so they can structure a deal that works. Third, they’re business valuation experts and can develop a good pricing strategy.
Taking Your Foot Off the Gas
We get it; now that you’ve taken the steps necessary to begin the sale process of your business, you’re excited and ready to move on. But don’t take your foot off the gas just yet. You must continue to operate your business as if nothing has changed.
If you start making changes or stepping away from your company more often, this could reflect in your business’s bottom line and could ultimately turn interested buyers away. A typical sales timeline can take anywhere from a few months to more than a year, so keep up your energy and focus until your closing documents have been signed.
Telling Your Employees
Another common mistake to avoid is telling your employees about selling your business in Colorado. Think about this for a moment. Most employees’ references for business sales are the large mergers and acquisitions discussed in the news, with mass layoffs and many other negative consequences.
If they know of a pending sale, they may find another job. Your employees don’t understand that they’re part of the value of the business, and the new owner will more than likely want them to stay on after the ownership transition. The same sentiment goes for customers, vendors, and suppliers. It is better to keep everyone in the dark until you can control the messaging they receive and introduce them to the new owner yourself
Waiting to Sell Your Business
Like many of the best things in life, selling a business takes time. The process starts with gathering information and documents about your business to get it listed. Then there is a host of strategic marketing and buyer discussions until the right buyer comes to play and the financing, closing, and legal transfer process can occur.
It is tough to rush the sale of a business, so it is crucial to list your business for sale 1-2 years before you would like to exit to allow time for the entire process to take place. Listing your business when you need to sell immediately, while possible, may cause compromises in the sale value that you would not have otherwise had to make.
Business brokers know the current market, what buyers are looking for, and sales comparables. They’re also experts in business valuation methods and the multiples typical for each industry. It is essential to trust your broker with their pricing strategy and keep your expectations for your sale price realistic. Listing a business for sale at too high a price will slow the process down, turn off potential great buyers, and ultimately cost you money at the closing table.
Up-to-date Financial Documentation
So we’re sharing a bonus mistake to avoid because it’s that important!
Business sales don’t always align perfectly with the financial year, but up-to-date financials are critical to presenting and selling your business to buyers. It can be essential if your company has been doing historically better and can help you command a better sale price at the end of the day.
To speak with a business broker about how to successfully manage the business sale process in Colorado, schedule a free consultation with a broker or visit our website today!