There comes the point in an entrepreneur’s life when it’s time to call it quits on a venture. It can be an exciting and bittersweet time, depending on your reasons for selling. Maybe your business has gotten so big and successful that you’re fielding acquisition offers, or maybe you want to move on to a different business venture. But selling your business is just as stressful as starting a new one, especially if you’re unsure where to start.
Many small business owners rush the entire process and end up losing thousands of dollars. You need to take a step back and look at the bigger picture if you don’t want your hard work and money to go down the drain. Fortunately, money-losing mistakes are often avoidable, and with a bit of planning and preparation, you can avoid pain and disappointment.
Here are a few things you need to remember if you’re in the process of selling your business.
1. Start early
The buyers aren’t going to wait forever, and if you make them wait too long, you could miss out on a potential sale. You’re not going to close a sale in a few days or weeks, or even months. In fact, the average business acquisition takes at least two years from start to finish. That’s why you need to start early and plan as if you already have a buyer, even if you don’t have plans of selling your business now.
Let’s say you want to sell your business to a firm like HH Acquisitions. For starters, you want to make the due diligence process as easy as possible for the people examining your books. Make sure to keep your records updated and to save all important data in your archives. That way, you can hand over the information without much difficulty. It also shows that you run a tight ship, and your business has been managed properly.
2. Hire the right representative
You must hire the right person to represent your interests if you want to get out ahead. All too often, small business owners ask their lawyers to handle the sale of the business. But unless they specialize in mergers and acquisitions, they may not possess the required skills to see the process to the end. You could even torpedo the entire deal if you’re not careful. Make sure to interview multiple brokers before making a decision.
3. Get the word out
Just because you have a broker handling the sale doesn’t mean you can sit back and relax. As the business owner, it’s your job to get the word out about your plans for sale. Leverage your network and connections to maximize the number of potential offers you’re going to get. That way, if anyone asks about your business, you can tell them directly. No one knows your business better than you, after all.
A lawyer can help with the legal aspects of selling, but you can’t rely on them to generate leads. You still have to go out and find a buyer. At the same time, you can’t just announce that you’re selling your business as that will spook your employees and customers. Find a way to accomplish your goals discreetly.
4. Know your value
The price tag is often the main point of contention in any selling deal. If you set the asking price too high, you could scare off potential buyers. Of course, no one is going to pay for an underperforming business. Setting the right price requires an awareness of market conditions and the industry you’re in. Check your books and compare your figure to recently sold businesses in the area.
On the other hand, you also stand to lose a lot of money if your asking price is too low. Many entrepreneurs end up setting the price too low due to poor advice, burnout, or illness. Even if you’re in a rush to sell your business, you shouldn’t set the price too low. It could signal the buyers that something is wrong, which is the last thing you want to do.
Selling a business is often more complex than most business owners realize. These four tips will help ensure a smoother and more equitable transaction. Planning early will help streamline the process and build a better relationship with potential buyers. You also need to partner with the right broker to ensure the deal goes through without a hitch. Don’t forget to talk to potential buyers and make your pitch. Finally, don’t undervalue or overvalue your offer.