Mistake #1: Selecting the wrong person to sell your business

Advice: The obvious advice is to select the right person to sell your business. This can only be achieved by asking many questions.

Determine the prospective business broker’s credentials, competence, professionalism, knowledge and experience by meeting him and asking him questions. Do not be fooled by a business broker that provides you the highest stated value for your business. If it sounds too good to be true, the value is probably inflated in an attempt to get your listing.

Determine the broker’s knowledge and experience in brokering businesses of all types and in particular your industry. Determine how many listings the broker or firm handles on average at any given time and the attention your business will receive.

Determine the broker’s success rate. Determine if the broker is selective or just playing the percentages by listing any and every business. Determine whether the broker will observe strict confidentiality so as to prevent harm to your business. Determine whether the broker will prequalify potential buyers so as not to waste your time or needlessly expose the sale of your business. Determine how the broker plans to present your business in the most favorable light and his marketing plan.

Remember, once a potential buyer is located, the sale process has only just begun. Over the course of eventually reaching a closing, a transaction will typically become derailed several times for several reasons. Your broker must have the ability and determination to overcome the inevitable obstacles. Ask for references if you have concerns.

Mistake #2: Waiting too long to sell your business.

Advice: The obvious advice is to not wait too long to sell your business. Owners often wait too long to sell their business because of either their desire to receive a couple more years of income/profits from their business before they sell or their desire to wait until their annual revenues increase or return to a former level.

In either instance, if the owner is “tired”, he should sell now.

Too often owners mentally retire and then their business and its value suffer. The owner neglects to continue to reinvest in and properly manage the business for the future because of their plan to sell in the near future.

Thereby, unforeseen events such as a new competitor, a new technology or the loss of a key employee often occur and such severely impacts the value of the business.