The Main Mistakes Business Sellers Make and How to Avoid Them

Are you planning to sell your business? While it can be an exciting and profitable experience, it can also be overwhelming, especially if you are a first-time seller.

Unfortunately, many business owners make mistakes that can lead to a loss of assets or selling the company for much less than its actual value. In this article, we’ll discuss some of the main mistakes that business sellers make and how to avoid them.

Mistake #1: Delegating the Sale to a Business Broker

The first mistake that many business sellers make is thinking they can completely delegate the sale to a business broker. It is natural to want to get rid of the daunting process, but relying too heavily on a broker can be a costly mistake. The broker’s role is to structure the deal and lead investors, but all the key decisions are ultimately made by the owner. Instead, use the broker as a tool to help you with the process, while also being actively involved in the sale.

Mistake #2: Avoiding Insecurity Issues

Sellers often try to avoid issues they feel insecure about, leading to primitive or distorted financial statements. Proper accounting records are crucial in determining the actual value of a business. By not maintaining accurate financial records, sellers may sell the company for much less than its actual value. Additionally, sellers may try to compensate by avoiding a detailed business valuation and end up psychologically fencing themselves off from the truth.

Mistake #3: Neglecting Manager Training

Business owners sometimes neglect the training of managers, leading investors to fear that the business revenue will plummet or cease to exist when the owner retires. To prevent this, it’s important to train managers to carry out all operational tasks, making it clear to investors that the business will continue to thrive even without the owner's constant presence.

Mistake #4: Rushing Broker Decisions

Choosing the right broker is crucial to ensuring you get the fullest possible value for your business. However, some sellers are too hasty in their broker decisions, often signing contracts with the first broker they meet. Instead, take your time and ask potential brokers if they can help put your business in order to increase its market capitalization. You should also find out if the broker has additional sources of investors, as this can increase demand and the price of your business.

Mistake #5: Not Hiring a Broker

Finally, some sellers try to sell their business without the help of a broker. While this may save money, it can also lead to a loss of assets or a sale for much less than the company’s actual value. A well-chosen broker has the experience and tools necessary to create the best deals and help you get the highest possible price for your business. You can read more about choosing a broker here.

Main things to remember:

Ошибки продавцов бизнеса 3

  • Business owners make the mistake of completely delegating the sale to a broker, thinking the broker will do all the necessary work and bring money "on the saucer."
  • Sellers avoid issues they feel insecure about, such as keeping primitive records, and lack of knowledge and self-doubt can lead to a terrible sight of financial statements.
  • Business owners tend to neglect the training of managers, which scares off investors who worry about the business revenue plummeting or ceasing to exist when the owner retires.
  • Sellers make the mistake of being too hasty in their broker decisions by entering into a contract with the very first broker they meet without taking the time to choose the right broker.
  • Some sellers try to do everything on their own instead of hiring a broker, but this often results in a nightmare or nothing changing, and they may not get the fullest possible value for their business.

To avoid these mistakes, business owners should choose the right broker by finding out if the broker will help put their business in order so that the market capitalization is higher, and they get the fullest possible value for their business. They should also find out about the relationship between supply and demand and not be too focused on commissions. Additionally, sellers should keep proper accounting records and maintain appropriate training of managers to ensure continuity when the owner retires. Negotiating position is also important. Read more about it in our article.

 

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