Common Sizable Mistakes to Avoid When Selling Your Business

Common Sizable Mistakes to Avoid When Selling Your Business - Sunbelt Business Brokers

In an unstable economy, selling your business can be a challenging experience. And that’s all the more reason to take your time and walk through the sales process carefully.

Some of the most common mistakes you can make when selling your business come from insufficient preparation or disengaging from the process. Here’s how to sell your business with relative ease.

The Importance of Preparation

The process of a successful sale starts long before you meet a single buyer. Before selling your business, you must ensure you’re prepared by doing the following:

  • Gathering governing and financial documents
  • Settling outstanding debts
  • Streamlining your operations
  • Doing inventory on your assets

Even by completing just some of these preliminary steps, you’ll be working on adding to the value of your business in the eyes of prospective buyers.

How to Properly Value Your Business

Recent data reveals that American businesses are undervalued by more than 15%. As such, you must make sure your business is properly valued to ensure a fair price.

You can value your business using one of several methods, such as:

  • Asset-Based Valuation: The difference between current assets and liabilities
  • Discounted Cash Flow: An estimate of the company’s future cash flows
  • Market Capitalization: The current share price multiplied by the number of shares

Here is where it helps to have the assistance of a professional. But you can always start by using Sunbelt’s business valuation calculator to gain insight into the current value of your business beforehand.

Potential Pains of Bypassing Due Diligence

Due diligence refers to the reasonable steps that a seller can take to ensure a smooth transition. Sellers should avoid the temptation to “check out” of the process, as that can lead to the following:

  • Undisclosed financial liabilities
  • Legal complications
  • Disruptions in company operations
  • Damage to your professional reputation
  • Regulatory non-compliance

Due diligence also demands that you ensure proper alignment between your company culture and the new buyer.

How to Handle Confidentiality

It’s often not wise to advertise that your business is for sale. Such news can affect your employee morale as well as your customer loyalty.

Though you may be able to find buyers through your own professional network, a business broker is often your best bet. That’s because these services offer the professional skill to handle your sale with skill as well as discretion. Typically, your business information will be kept confidential, and the identity of both buyer and seller will not be revealed until after the broker conducts a thorough vetting process.

How to Handle Employee Communication

When (and how) should you break the news to your troops? In many cases, having an experienced team in place will add value to your company. But news of a sale may diminish their morale.

Here’s how to handle communication with your team members:

  • Announce the decision after the sale has been made
  • Communicate details about your employees’ futures after the transition
  • Be clear and honest about the buyers’ plans for the future of the company
  • Involve key employees in the communication process
  • Listen to employee concerns

Again, your buyer may prefer to keep the same team or even expand upon it. And if that’s the case, bringing the news forward can be a time for your employees to celebrate the future while still reflecting on the past.

Seeking Professional Advice

You didn’t build your business overnight. And that means selling it will take some time and knowledge. Reaching out to lawyers, accountants, and other professionals can provide invaluable guidance as you navigate the sales process. Additionally, a business broker can provide direct assistance in business valuation, networking with buyers, and guiding you through each step of the sales process, ensuring a smooth transaction for you, your buyer, and your employees.

Selling Your Business With Ease

Sunbelt Business Brokers can help you reach your personal and professional goals when selling your business. When you’re ready to discuss the sales process, contact Sunbelt to speak to one of our team members.