Every business has a lifespan. The key to success is knowing how to manage the life cycle to exit properly. When it is finally time for you to exit, the first thing you must do is learn from those who went before you. You don’t want to make a terrible mistake only to find out it is one of the most common mistakes business owners make, do you? In this post, we will be looking at the top mistakes Sunbelt business brokers deal with and advise business owners to avoid.
Having no succession plan
In the early years of a business, most of the work is done by a business owner/operator. At times, business owners take a sense of satisfaction that is so great that they start believing the business cannot survive without them. While this is okay if you don’t plan on growing beyond what you can manage, when it comes to selling, buyers will consider your business’ over-reliance on you a significant weakness. This will even devalue your business during negotiations. To enhance the value of your business and make it easy to sell, Sunbelt business brokers recommend that you hire a team to take over your responsibilities. You should train key members to handle every phase of the operations. This will show buyers that the business can thrive in your absence.
Failing to diversify
Another common mistake is failing to step out of your comfort zone. Some businesses go on for years selling the same exact product. This locks them to a specific kind of client. When the customer needs change, such businesses end up failing. Lack of diversity will significantly devalue your business. A business valuation can help identify unexplored opportunities. You can use this information to diversify so that your business is not dependent on a single source of revenue. Diversity, further, protects a business from economic downturns.
Providing inaccurate financials
Serious buyers will want to do their own valuation. They rely on you to provide accurate data about your business. This includes 5 years of tax returns and financial statements. If the records you provide are not in order, you will not be able to show the maximum value of your business to buyers. If the records are inaccurate, you may lose the trust of buyers. Missing or inaccurate financials will cost you a good deal.
Not having key team members on board
Last but not least, you need to make sure you have the right team in their respective capacities. Investors want to buy businesses that can run smoothly once they take over. Lacking the right team will scare off buyers.