Is it time to get out? Better yet, will it be time to get out, maybe next year or the year after? One of the biggest mistakes business owners make when selling their businesses is failing to plan far enough in advance for the sale. If it’s time to get out right now, then you may have waited too long to plan.
Continue reading for tips on how to avoid some common mistakes when selling your business.
Plan ahead. Your business is definitely not a house, but you should pay the same attention to preparing your business for sale as you would in preparing your home for sale. Are your financial and personnel records in order? Do you have defensible profitability statements? Are your leases and permits current? Also, examine your own life plans when making plans to sell a business. Can you devote a lot of time and energy over the next couple of years to selling your business? Have you defined, for yourself and your family, the extent of your involvement during the transition and after closing?
Consider hiring a broker. So many business owners think they can sell their businesses themselves. Don’t focus on saving the 10 percent brokerage fee. Focus on the benefits of hiring a professional to prepare the business for sale, market the business, prequalify buyers and show the business to potential buyers. Compare that 10 percent brokerage fee to the cost of your time handling all those activities yourself.
Prequalify your buyers. Business sale professionals tend to agree that early prequalification does not, in fact, scare off potential buyers. Rather, prequalification has the tendency to increase potential buyers’ interest and move them along in the buying cycle. Prequalification also protects your business’s important and sensitive information by limiting release of that information to serious prospects. Prequalification can include confidentiality statements and financial background information on the buyers.
These pieces of advice barely scratch the surface in terms of issues that business owners must consider when planning an exit strategy. The Small Business Administration’s website has helpful, in-depth information on selling your business. Better yet, consult an experienced business transactions attorney.