Mistakes to avoid when selling your small business:
Selling a business requires a lot of thought and exertion, that you will have
to put in the sales process and this could have a massive bearing
on the price that you receive for your business. The prospective
purchaser of the business is going to ask you for humungous
amount of information regarding your business. But it is not
safe to disclose all the delicate information about the business
to the probable buyer thus you will have to decide that which
and how much information you are going to reveal to the buyer
prior to the sale. You will have to devote a lot of your time
with potential buyers in elucidating them about the business.
Many people position their businesses to sell in the market and then retreat from the idea because either they do not get offers or they do not get a satisfactory price for their business. So you should always be prepared for the situation that you may not find an apposite buyer for your business. Meanwhile you will have to take necessary steps to retain your business in good shape.
Generally small business owners make severe mistakes in the process of selling their business and suffer loss of thousands of dollars and their hard work of years and investment in the business goes wasted. Entrepreneurs build their businesses into success with their hard work and determination thus they want to acquire the benefits by selling the business at a higher price.
These are some mistakes that are generally made by small businesses while selling their business that should always be avoided.
Mistake 1: Not planning beforehand for selling the
Planning is important at every stage of the business, may it be the setting up of a business or selling off of the business. Sometimes not planning in advance or waiting too long for a good opportunity to come results in losing an appropriate chance for selling the small business. Study discloses that at an average two to four years are consumed in selling a small business.
Therefore, for successfully selling a business the business owner must do
long term planning. This can be
done by keeping organized records, a detailed business description
and sales related information readily available all the times.
This information will help in providing the prospective buyers
an in depth knowledge about the business, its workings and its
competence level. This data can help in negotiating an acceptable
price for the business.
Mistake 2: Not finding the right broker or consultant
for your business:
As the process of selling a business is very complicated thus it becomes essential to employ a suitable broker or consultant for selling the business. Frequently business owners employ the first person they meet for selling their business as they just want to list their business and want to start the selling process but this impatience shown by the business owners can be very expensive for the business. You should take your time to interview many brokers and should employ the most suitable one. You should employ such a broker who has a realistic approach.
Mistake 3: Not promoting or marketing yourself
Relying totally on your broker that he will do all the work in promoting the sale of your business can de fatal. The best promoter for your business is you yourself. No one can know your business better than you and no one will be more aggravated and passionate about your business than you.
The broker would be doing his work but you should also promote your business. As all the benefits from selling your business are going to accrue to you and thus you should take active interest in promoting your business and yourself to bargain a higher price for your business.
Mistake 4: Asking too much or too little for the business
Every business owner wants to get more and more value for his business. But setting a very high or unrealistic price of the business can take away the buyers from you. For calculating an adequate value of your business you should consider your industry, similar kind of businesses and the present condition of the economy while pricing your business.
Valuing the business too low is also a mistake which is done by business owners. The reasons behind pricing a business too low are that the owner suffers from an illness, did not get good advice or is totally exhausted. While pricing your business you should consult and take advice from your broker and consultant. You should also research about other business sales in your industry which will help you in arriving at an appropriate price for your business.
Mistake 5: Selling the business to the wrong person
Sometimes business owners are very impatient and accept the first offer made to them, but it may not be a wise decision to do so. It can be that you may have got a much better offer for your business. The sale of the business often drops after the business is takeover by the new owner, the reasons for such decrease in sales could be that the new owner may lack business expertise, maybe he is a poor leader or that he is not open to changes. When the business fails the new owner may end up by going out of business and leaves the previous owner with the failed business.
Thus by avoiding these mistakes and by applying some common sense, while selling your business, you can crack a fair deal. Whatever be the motivation behind selling your business you will just get one chance to maximize your returns for your hard work. While selling a business you should also take care of the tax implications otherwise you may end up paying huge capital gains tax bill.
By employing a suitable broker you can increase the chances of a profitable
and prompt sale. Thus you should assess your options and should
choose the best alternative for you and your business.
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