5 Mistakes to Avoid When Selling a Business
Connecting with the wrong buyer is the most critical failure of successful businesses owners when they come to selling. The market is highly competitive, volatile, and to the punter, completely unpredictable.
The key to selling a business is making sure the right team is working with you and that you realise your value as the team leader. The mistakes we see consistently as business brokers fall into five broad categories. All are easily avoided by assembling a lawyer, accountant and experienced business broker.
Failure to Call in the Experts
Sellers that take all the work of preparing a business for sale on their own almost always overlook critical information. Too often, working within a business means it’s impossible to value intangible assets with any objectivity. Details are missed and errors appear in accounting ledgers. The back and forth required to qualify details becomes onerous and eventually potential buyers are put off by the lack of professionalism.
As a business owner, you’re an expert within the business and not at marketing or preparing a business for sale. Leveraging the expertise of planners, marketers, accountants, lawyers and brokers will present your business as a trustworthy and professionally run enterprise.
No Plans for Transition
As the owner of your business, you are an expert in how it operates. The relationship you have with your customer is dynamic and knowable only over time. The buyer will want to know what you have in mind to transition the business and why.
Businesses that fail to meet market expectations often neglect a transition plan in their sales prospectus. A potential buyer with no experience in the field will always be put off by a lack of communication as to why and how long you plan to transition the business.
Removal from the Sales Process
As the leader of the team selling a business, the owner should be guided by the team and always aware of the process. Business owners who remove themselves from the sale fail to build trust and rapport with a potential buyer that ultimately leads to a sale.
Neglecting an opportunity to continually refine the pitch with a business broker and present a polished product to potential buyers leads to missed opportunities. You will pay for not being involved in the sale with both your time and money, with your business remaining on the market for longer and longer.
No Steak Behind the Sizzle
While the marketing of your business is all about the sizzle, if there’s nothing behind the promise to back it up, you’ll quickly alienate buyers and damage your personal and professional reputation, not to mention your business.
Sellers that make the mistake of exaggerating or overstating the value of their business, or minimising issues and problems, are often the target of nasty lawsuits after a sale.
Discretion at All Times
Sellers who underestimate the need for discretion can also inflict limitations on the value of their business. Employees, customers and even competitors can feel threatened by a sale and limit the prospect of a successful sale. Confidentiality in sensitive industries, long-standing businesses and mergers are often essential for a successful sale.
Sellers who don’t discuss this finer point with their team often risk devaluing their business.
Ready to Sell?
As Australia’s leading business, LJ Hooker Business Broking has more than 16,000 buyers on its bespoke database. Designed specifically to manage business acquisitions and mergers, the LJ Hooker Business Broking database is the only one of its kind, linking buyers and sellers throughout Australia. For more on how to sell your business successfully, explore our website or call 02 9552 1111.
