Mistakes are often easily avoided when it comes to selling your business. As a business owner a lot of hard work and investment has been put in, to ensure the success of your company. You need to make sure that the time and effort which has been put into the business doesn’t lose you thousands of pounds in the process of selling.
Asking too much or too little for your business
Consider your industry and similar businesses when pricing your business to sell. Setting a very high unfeasible price tag can lead to a dead end. Expecting to sell a business, which generates little or no profit, for a high price is not going to work. You could generate more profit if this applies to you by maybe doing a going- out- of -business- sale.
Another common mistake is to price your business too low. There could several reasons why this happens, it could be due to ill health or you have been given bad advice. It is essential that you do your homework first and research other business sales before making any rash decisions about asking price.
Waiting too long to sell
Long- term planning is a vital key to any successful business sale. You could miss your window of opportunity if you wait too long to sell. It takes an average of two to four years to sell a small business. You should keep updated records a detailed business history and sales portfolio on hand at all times. You never know when that perfect buyer will appear and being prepared stands you in a better position.
Not promoting or marketing yourself
Who knows your business as well as you do? There is definitely no one who would be more motivated and passionate by it than you are. Which is why it is imperative that although a business broker will be able to generate some activity, ultimately it will be down to you to see prospective purchasers. Have a plan and strategy in place just to eliminate any fears you may have.
Selling to the wrong person
This has been your life. You may be content to see just anyone take your business, even if you don’t think they are right for it. On the other hand you may want to ensure that your loyal customers and suppliers are looked after. Of course, if there is a “buy out” agreement specifying that a part of the price is only paid after satisfactory performance over a period of time, you want to be certain that the buyer is a good fit.
We have some mistrust of business brokers and recommend caution. Some are very good but others seem to make more from upfront fees than actually selling businesses. Often businesses are overpriced just to get them on the broker’s books, with no hope of selling. One recent example was a business, valued by two “experts” at £80,000 which, over a period of time, was gradually reduced in price until it was eventually sold for £15,000! Our valuation was considerably closer to the eventual selling price than either of the brokers.
Before you embark on trying to sell your business, it makes sense to consider an independent valuation, which we can do for you. Some businesses can be sold privately without having to pay broker fees.
It makes even more sense to plan ahead. There may be things you can do to make your accounts look better and more attractive – if you start a few years in advance. If you think you are likely to want to sell your business within the next five years, let us help you put a plan together to improve the saleability of the business. If we know you are planning to sell, we may even find a buyer for you in that time.
Should you wish to speak with us to discuss your business needs, please contact us on (01509) 816150 or by the contact form below.