Selling a small business is never an easy decision. As a business owner, you put a lot of time and effort into building the business. Therefore, it is often not just a financial decision, but an emotional one as well. For this reason, it is important to have as much information as possible before moving forward. If you do come to the conclusion that selling is the best route, be sure to avoid these common mistakes.
Not selling at the right time
Timing is everything when it comes to selling a small business. Before listing your business, there are steps you should take to ensure it is best-positioned for a profitable sale. Gather financial and tax documents for the last several years as well as legal documents such as leases agreements or client contracts. Additionally, you should get the physical working area organized and in good working order by cleaning and completing necessary repairs. While preparation is important, it should be done in a timely manner, since waiting too long to sell can also be a mistake. The market can change quickly, and many factors can affect a buyer’s willingness to make an offer. Evaluate your situation carefully and list when business is good in order to increase your chance of a good sale.
Not valuing the small business properly
In order to determine a reasonable listing price for your business, you must be sure that you have an accurate valuation. You don’t want to lose money by selling it for too little, but listing it at too high of a price can scare off potential buyers. It’s a good idea to get a professional business valuation which will give you an objective opinion of a reasonable selling price, based on the strengths and weaknesses of your business, its financial soundness and a comparison of your competitors and similar sales.
Trying to do it alone
Selling a small business is a complex process. So it is unrealistic to expect that you could successfully navigate the whole process without any help. This is your life’s work, so it is important to call in the experts to make sure the deal goes smoothly. For the best support and guidance, surround yourself with a competent team. First, this should include a business broker who can be extremely valuable in matching the right buyers and sellers. Next, a good accountant will advise on your financial status, including your assets and liabilities and what will be included in the sale. Finally, an experienced attorney is essential throughout the process for negotiating, preparing the necessary agreements to legally transfer the business, as well as ensuring that you complete the sale free from any further obligations or liabilities.
Not being financially prepared for life after the sale
When selling your small business with the intent of retiring, you must make sure you are prepared financially for life after you’ve sold it. With no business to draw regular income from, you should have confidence in your savings and investments, as well as have a solid estate plan in place for security. Working with an established attorney before you retire can help you develop a sound financial strategy for wealth protection throughout your retirement years.
The team at Churchill, Quinn, Richtman & Hamilton, Ltd is experienced in mergers and acquisitions and will be a valuable partner in selling your small business. From transfer agreements to non-disclosure agreements to negotiating the best terms for your sale, we have decades of experience offering innovative approaches to complex transactions. Additionally, our estate planning experts will help ensure your wealth is protected now and for future generations. Contact us at 847-223-1500 or visit us online to learn more.
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