Selling a Business: Mistakes You Should Avoid
Selling your business is a life-changing decision that requires a lot of work, but unfortunately, many business owners are not ready for that commitment. Lack of information and poor planning cause business owners to make costly mistakes that prevent them from maximizing their profit or successfully selling and exiting their business altogether. When selling a business, mistakes can happen, but you can avoid many of them by being informed. These are the five most common mistakes we see when selling a Charlotte, NC business!
Mistakes Business Sellers Need to Avoid in Charlotte, NC
If you’re ready to retire to a relaxing lifestyle or move on to your next small business venture, it may be time to find a buyer for your Charlotte area business. To find this right buyer, transition out of ownership, and get the most value for your hard work, you’ll want to avoid these mistakes.
1. Choosing the Wrong Asking Price
The biggest mistake business owners can make is setting the wrong asking price for their listing. You can’t put the price too high, or buyers won’t bite, and you can’t undersell either, or you’ll lose money. Plus, if your sale price is too low, potential buyers might be worried that it can’t stay afloat in the future.
Learning the market value of your business is the first step in forming a fair asking price. However, entrepreneurs tend to overvalue their businesses. While this is understandable, as you’ve put years of work into growing your business, it won’t help you make a successful exit. When you work with a third-party intermediary who knows the market in Charlotte, NC, the result is an accurate business valuation and a fair asking price that attracts the right buyers.
2. Poor Planning
Whatever reason you have for going to market, having an exit plan will be critical to your success.
“Sellers have more options and are generally positioned to get a higher value when they make exit planning an ongoing part of their business plans.” – Lisa Riley, Principal of Delta Business Advisors, LLC.
Include details like market research, listing preparation, marketing your business, and more to ensure you get the best value for your Charlotte-based business. Not defining your personal goals for your exit and what you will do after the sale can cloud your judgment. Ask yourself these questions as you begin planning your exit:
- What will your role be after the sale? Will you provide training or help the new owner transition?
- Do you have all of your finances and bookkeeping documents in order?
- What will you include in the asking price? Does the business have existing inventory, tangible or intangible assets, leads, or a valued customer base? What will the down payment be? Will you offer seller financing?
- How will you advertise or market the sale of your business?
- How will you screen and qualify buyers? Who is your ideal buyer? Do you need assistance with succession planning?
- What is your negotiation strategy?
- What is your bottom line for selling?
A fully fleshed-out exit strategy is critical to a successful business sale. Take ample time to consider every factor that could affect your exit strategy.
3. Lack of Representation
Business owners almost always underestimate the time, expertise, and planning needed to sell their business in Charlotte, not to mention the amount of legal advice and guidance you will need. A team of trusted business professionals can save you time and money and have the ability to keep the transaction confidential. Work with a business broker or mergers and acquisitions professional like the experts at VR Business Brokers Charlotte so you can stay focused on what matters – running and growing your business!
4. Inadequate Documentation
A prospective buyer needs to be excited about your business and its potential to grow. Compiling all of your business’s important documents will help interested buyers and their team of professionals get a clear picture of the position of your business and allow them a chance to validate its financial health. Whether or not you’ve stayed up to date on cash flow numbers, taxes, and general bookkeeping, it’s important that small business owners have a certified public accountant (CPA) or another type of financial planner audit your business to ensure your financial statements are in order.
5. Rushing the Sale
Selling a business generally takes at least six months, so know that this will take time. Once you’ve listed your business for sale in Charlotte, NC, you should continue doing what you can to increase the value of your business. Any improvement will make it more appealing to potential buyers and allow you to focus on something other than time. While you focus on growing your business, your trusted team of professionals takes care of marketing the listing and qualifying buyers.
Rushing the sale could lead you to choose the wrong buyer by jumping at the first offer, even if it’s lower than your asking price. Take the time to investigate potential buyers and choose someone you trust to take care of your employees and maintain the relationships you built with your customers, partners, and community.
As you begin exit planning, consider everything we’ve laid out for you here. Prepare for many different situations because the selling process can be unpredictable, and it will pay off to be ready for whatever comes your way. VR Business Brokers Charlotte will be here when you’re willing to move forward with your business sale. Reach out to an expert broker today to get started!
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