Selling your business is a significant decision. If you decide to take this step, you want the transaction to go off without a hitch. Without planning and arming yourself with knowledge, there are bound to be some bumps in the road that could compromise a smooth and profitable process. Here are the top mistakes the business owners make when selling their business that you can and should avoid. 

Failing to Be Prepared 

Just like selling a house, being prepared to sell your business can save a lot of time and hassle. Your business likely needs some clean-up and TLC before it goes on the market. You may want to evaluate and take action on the following: 

• Organization of records and books 
• Contract documentation and updating 
• Staffing considerations 
• Threatened or pending litigation 
• Federal and state income, excise and sales tax compliance, reporting and payments 

Keep in mind that these often don’t have quick fixes. It might take some time to prepare your business for sale when it comes to these issues. It may be time-consuming and frustrating; however, it will be worth it in the end. 

Determining the Price Too Soon 

You shouldn’t set the sale price of your business until you genuinely understand its actual value. A company is only worth as much as someone is willing to pay for it. Avoid using a simple EBITDA calculation, as you may end up leaving a significant amount of money on the table. It’s your job as the seller to paint a compelling picture of why they want your business. 

It’s usually best to hire a professional business appraiser. These appraisers know how to account for everything to determine the right price point for your business. They may also be able to locate any problems with your records or anything that needs to be fixed before you sell.  

Failing to Take Advantage of Professional Help 

Not only should you consider hiring an appraiser, but you should also consider enlisting the help of other professionals as well, especially a seasoned business attorney.  

Being a pro at running and managing a successful company is quite different from being a pro at selling that same company. Business owners understandably want to get the best possible price, and hiring professionals to help improve that outcome is recommended. 

Your attorney can help ensure that you are as prepared as possible to sell the business, that you don’t fall for any scams, that your records and statements are in order, that your property, inventory, and equipment are in good condition, and that you won’t settle for any offers that are too low. It’s always a good idea to have a lawyer on your side for any business matters, including the sale of your business. 

Not Vetting Potential Buyers 

Any potential buyers should be pre-qualified early in the purchasing process. This step might help save you time that would otherwise be wasted on individuals who won’t be capable of following through with a purchase deal. Vetting buyers also ensures that the people you encounter are legitimately interested in buying your business. It’s also crucial because you don’t want to risk compromising any private or sensitive business information to those who aren’t vetted. 

Not Exploring the Option of an Internal Sale 

Selling a business to someone internal can have financial and other benefits. You can sell your business to someone already inside your company, for example, employees, management, or even family members. Generally, internal transfers involve a sale at a lower gross price. Still, they may involve less risk, more control, and could generate a higher net sale price because of lower overall fees and tax minimization. In addition to a higher net sale price, transferring your business to someone already on the inside might give you greater confidence and satisfaction that your business will be in good hands even when you are gone. 

Not Being Prepared to Negotiate 

Negotiations are typical in business sales, just as they are in home sales. To help get your business to the right buyer without being on the market too long, you should be prepared to negotiate. There are many options when it comes to negotiating the sale of a business. If you hire an experienced business attorney to help you navigate this process, they can help you creatively negotiate to get what you want out of the sale. 

Are You Ready to Sell Your Business? Contact the Business Attorneys at Hackstaff Snow Atkinson & Griess Today 

At Hackstaff Snow Atkinson & Griess, we know you’ve worked hard to build your business. You’ve given sweat, sleepless nights, and even tears. We know that deciding to sell is not one most business owners take lightly. That’s why we are here to prevent mistakes along the way. You deserve to be treated fairly and to receive a fair price for your business. Whether it’s vetting potential buyers, looking into an internal sale, or anything in between, we will be your advocate so that your hard work won’t have been in vain. Reach out to our office today to schedule a consultation with one of our dedicated business attorneys.