Navigating the sale of your small business is a significant step, and avoiding common pitfalls is crucial for a successful transaction. Here are a few prevalent mistakes to steer clear of when selling your business.
Overpricing
While pride in your business is natural, determining a listing price based on emotions can hinder the sale. Rely on an objective third-party valuation to assess the market accurately. A Transworld Business Advisors broker can help give you an idea what a buyer will pay for your business, and (some would argue more importantly) what a buyer’s bank will pay. Be transparent about your earnings, avoiding overstatements that may deter potential buyers. In addition, excessive add backs for personal expenses are rarely considered by a buyer or a bank. Generally, EBITDA plus Owner’s Compensation is a good safe way to assess how much money your business makes in the eyes of your buyer and his/her bank.
Lack of preparation
Clean books add to the value of a business and conversely, disorganized financials turn buyers away. Having key employees in place also adds value. If you are understaffed, it’s best to fix that weakness prior to listing the business for sale. If there are major repairs needed to the premises, make them before inviting interested buyers to see the business. Think about what you’d like to see if you were to be touring a business.
Not Being Open Minded
Be open to various offers including entertaining some seller financing perhaps. This can help you maximize your sales price. Consider that at some point the market will tell you what the business is worth. It is not worth what you say or what your accountant says or what your broker says….it is worth what the market will pay for it ultimately.
Not seeking help
Selling your business is a complex process; seek professional assistance. Engage experts such as your accountant and an attorney with direct experience in acquisition and sale of small businesses. A professional broker can confidentially market your business and evaluate potential buyers, allowing you to focus on running your business until the deal is finalized.
Deciding to sell your business is both exciting and challenging. At Transworld Business Advisors, our seasoned brokers, possess the expertise to guide you through this journey. Schedule a free consultation today to discover how Transworld Business Advisors can help make your business sale a success.