Common Pitfalls to Avoid When Selling a Business

Selling a business can be a challenging process. This is an asset you have worked hard to build, and it can be difficult to make the decision to let it go. When you are so close to the situation, it is easy to fall into some traps that may prevent the sale of your business from being as successful as it could be. Sell an Accounting Practice

Here are five common mistakes sellers make when they put their business up for sale:

Waiting too Long to Decide to Sell: One of the basic rules for successful negotiation is to go in with lots of leverage. In other words, you want to approach the sale with the mindset that you have plenty of time and you are not desperate to accept the first halfway decent offer that comes along. This can only happen if you plan ahead. A good rule of thumb is to begin the process at least a year before you want the business to be sold. If you wait until you have to sell, chances are you will not receive as much as you would like.

Make Yourself Indispensable: When a business is first starting up, the owner works long hours and is invaluable to its success. Over time, however, it is a good idea to train up other quality individuals to do a lot that work for you. If your business is not in a position to operate smoothly without you, it is best to rectify this situation before putting it on the market.

Setting an Unrealistic Valuation: Having invested so much time and effort in its success, it is easy for the owner to develop an unrealistic idea of what the business is really worth. You can see countless examples of this on the TV show Shark Tank. There are a variety of ways to value a business, and the correct formula depends on the type of business and industry you are in. The point is, make sure you have solid numbers to back up your valuation. Valuating a business too high can be seen as a negative factor for prospective buyers.

Failure to Use Confidentiality Agreements: The use of confidentiality agreements is essential when selling a business. Otherwise, your competitors could learn your business is for sale and use the process to obtain trade secrets and other proprietary information. To prevent this from happening, a non-disclosure agreement (NDA) should be signed by prospective buyers from the outset. This shows buyers you are serious about maintaining confidentiality not only for yourself but also for the eventual new owner.

Trying to Do Everything Yourself: Business owners who have the company up for sale often find themselves in the middle of both processes. This can take up an enormous amount of your time and make it difficult to focus on the important tasks that must be done. To help with the selling process, it is best to partner with a reputable business intermediary. A business broker has in-depth knowledge of these types of transactions, and their expertise can be leveraged to ensure you avoid mistakes and sell your business for top dollar.

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