How To Avoid 3 Common Mistakes When Selling Your Business

A business broker is a qualified professional who’s role is to assist you when you are selling your business.  A business broker has a very broad commercial understanding of business, including financials, market pricing, how to negotiate a deal, skills to navigate through due diligence and expertise to get the deal or transaction settled. They can also steer you in the right direction when it comes to appointing experts on your team.

As a business owner you are an expert at running your business - business brokers are experts at selling businesses.

Sometimes business owners try to sell their businesses themselves, this can be a time consuming and costly mistake.

Here are the Top 3 mistakes a business owner makes with selling their business themselves:

1. Financial Documents

The first mistake is poor record keeping or out of date financial documents – these don’t reflect your business in the best light. A potential buyer, their accountant and bank want up to date, quality information for their due diligence, business plan preparation and cash flow projections. This gives all parties a quiet confidence in your business;

2. Sale Price

The second mistake, a sale price that’s too high, or too low.  If your price is too high you run the risk of losing potential purchasers purely because they don’t want to offend you or it is simply outside their budget; or if your price is too low, buyers can become suspicious that there is something wrong with the business.  Pricing your business for sale is critical – you need to be realistic and meet the market.  Both parties need to be able to walk away happy;

3. Good Advice

And finally, engaging the wrong advisors both buyer and seller should surround themselves with advisors to assist them in their decision making.  Think accountant & lawyer - these advisors will be reviewing your pricing, undertaking due diligence and comparing your business to others on the market.  A finance broker will also assist your buyer raise the necessary finance to settle the transaction.  By engaging a business broker, they understand how important it is that both parties engage quality advisors who specialise in business sale transactions, and therefore will assist to coordinate this through quality referral of professional advisors.  Let's get the deal done right, the first time!

So, in summary, in order to avoid the top 3 mistakes when selling your business it is critical to set your business up correctly for sale.  Get all your financial statements up to date, even have your accountant prepare an Abridged Profit & Loss Statement for business sale purposes, set your price after analysing the business and in line with current market conditions, and lastly surround yourself with a team of advisors that are well versed in business sales.  This will enable you to avoid expensive mistakes and a lot of stress as you work through a potential sale.  Every business owner wants their deal to settle, first time!

When it comes to avoiding expensive business sale mistakes, give yourself an Advantage and contact us today.