Mistakes You Must Avoid When Selling a Business

When you are ready for an exit, the first professional you need to contact is a business broker San Diego. A business broker will have experience selling businesses that are similar to yours and will be able to navigate the challenges with ease. Even so, even with the best business broker by your side, it is important that you familiarize yourself with the common mistakes that business owners make. Let’s take a look at the main ones.

Insufficient preparation
Lack of preparation is the number one cause of problems when selling a business. Prior to listing your business, you need to address several key aspects. If you are not being forced to sell, your business brokers San Diego will recommend you start by addressing the following:

Organizing your financial documents
Strive for sustainable profitability
Fix all lease issues
Take care of staffing problems
Pay your debts and collect from debtors

Needless to say, getting ready to sell should start at least 2 years before you list your business. That way you will have sufficient time to work on the flaws of your business and improve its value.

Overconfidence
Having created a business from the ground up can lead to overconfidence. Overconfidence will cause you to overprice your business or have unrealistic expectations on how fast your business should sell. The best way to avoid this mistake is to get an objective third-party business valuation. Your business broker San Diego will also help manage your expectations.

Unwillingness to leverage professionals
Selling a business might seem easy but it is not. There are dozens of complex challenges you have to deal with. The slightest mistake during marketing, negotiations or any other phase of the sale can lead to tremendous problems. Yes working with a business broker will cost you about 10% of your earnings but the service you get will earn you a lot more. You also need to leverage the expertise of lawyers, accountants and financial consultants.

Failing to pre-qualify buyers
Not every buyer that will inquire about your business is interested in buying it. Some people just want to learn your trade secrets. This is why prequalifying buyers is of utmost importance when selling a business. You need to know if the buyer has the means and the will to buy your business. Buyers must also sign nondisclosure agreements.

Failing to address transition problems
You have to keep the transition process in mind throughout the sale. During negotiations, discuss the transition with your buyer. Make sure there is a mutually acceptable arrangement.

Whether you are selling on your own or with the help of business brokers San Diego, familiarizing yourself with these mistakes will give you an upper hand. The rule of thumb, however, is to hire a dependable business broker early in the process.

Business broker San Diego

What Client’s Say

We Couldn’t Be Happier

"When we thought about selling we had no idea what our business was worth or how to go about selling. What you were able to do was to cut through the fog so that we understood the valuation issue and had a comfort level with the process. As you know we ended up selling for somewhat more than the original valuation and we got all cash and our CPA loved the way our tax liability was minimized. We couldn’t be happier!"

Over $250,000 More

"Our first contact with you shocked us when you suggested that we wait 18 months before selling because you believed that if we hit our projections that the value would be significantly greater. As it turned out we not only followed your advice but also got slightly over $250,000 more than we originally had hoped for. It is seldom that we have had the opportunity to deal with a firm that doesn’t want both money and a commitment NOW. It was clear and obvious that you had our best interests at heart."

You Got the Valuation We Agreed On

"You did a great job on the sale of our business in really beating the bushes for buyers, including a UK company that was an active suitor. You managed to get the valuation that we had all agreed upon and got it substantially all in cash and got the transaction closed with little to no problems or expensive lawyers involved."

Thank You for Handling Our Business

"Our business was smaller than what your firm normally handles but it was a BIG part of our net worth and savings. Thank you for handling our business and we were very pleased and delighted with the results."

More Than Anticipated

"Our transaction was involved as we had different corporate entities located in different states. Our only regret is that we didn’t retain your services before 2012 when we paid $25,000 to a firm in Texas that did a valuation and market analysis for us before then failing to do anything in the way of trying to sell our business. You got it sold for more than anticipated."

The Sales Process