Small business owners can make errors that can be very costly when selling their business. If you are not careful, then you could end up severely underselling your business.
Luckily, with the proper preparation and planning, most of the possible mistakes in selling a business are avoidable. It also depends on what kind of sale you’re making.
If you’re selling a clinic to an experienced acquisition company such as HH Acquisitions, you can relax in the knowledge that it is in their best interests to give you a fair and equitable deal. On the other hand, if you’re selling your restaurant to someone who wants to franchise the location, it is in their best interest to under-bid.
Be aware of the different requirements of the different types of possible buyers and have a contingency plan in place. If you are not yet thinking to sell your business, it helps to start evaluating it for a possible sale from now onward. That way you will be better prepared if an offer comes along that makes you interested in a sale.
Sell to the Right Person
Selling your business to someone unprepared to run a business of that scale and type is a recipe for disaster. Especially if you have a contract with them that pays you in installments. If they run your business into the ground then you will have lost your company and you won’t have any money to show for it either.
Do a background check and take your time assessing the buyer, it is better to do due diligence and make the right sale. Even if you get a lump sum and your assets are unaffected, it will still hurt to see the business you built up to be taken down by improper management.
Have a Contract for Your Involvement
You need a contract that specifically states what your involvement with the company will look like after the sale. Whether they keep you on as a consultant or whether you plan to retire, this document needs to exist.
It will make it easier for you to distance yourself from the running of the business and indemnify you in the case of any possible legal actions. Give a lot of consideration to how you want your life to look one year after the sale. This should help you to know how to approach the terms of the contract.
Have Your Business Professionally Audited
You may have a number in mind for the value of your business, but remember that you are way too close to be objective. Audit your company from within and then hire an outside accounting firm to make an independent audit as well. This way you know exactly how much to ask for when putting your business up for sale.
If you are selling because your profits are low, then you may have to go for the highest cash offer you can get. No one will buy a failing business at the amount you would value it if it were turning a profit.
On the other hand, if your business is profitable, then you can factor in how much more successful it will become. A business that shows steady growth is going to be more valuable and you can negotiate a sale that gives you a very healthy profit.
Motivate and Train Effective Employees
Your staff can be a very significant part of the reason why your business is desirable on the market. Buyers are unlikely to replace all or even half of the employees in your business. Therefore, having an efficient and productive team in place will make your business easier to sell at a high value.
Well-trained employees who can work with minimal supervision are an integral part of the success of a business. Making sure that your employees embody this ethic is not just a way to guarantee that you can sell your business at a good price. It is also an investment in your employees’ future.
Helping them to be highly skilled employees guarantees their loyalty to you. This loyalty and dedication will be what drives your company’s successes to the point where it becomes a viable contender on the sale market.
One of the most important factors in selling a business is choosing the right time to sell. Sometimes, even if your business is turning a profit, you may feel burned out and ready to sell. But the market may not be amenable to getting you a good price.
Keep your eye on how to economy is shifting and the types of businesses that are seeing more interest. This will help you find the right time to put your business on sale and attract many potential buyers. It is always better to have multiple offers.