Everyday small business owners make drastic mistakes when selling their business and lose thousands of dollars in the process. All their hard work and long-term investment goes down the drain. As entrepreneurs they had once dreamed of owning their own business and building it to success. They then plan to reap the rewards in the form of a successful business sale. Sounds like a great plan! But, making the sale is not as easy as it may appear.
As an entrepreneur, I have built and sold six businesses including a car rental company, two mini-storage facilities and three retail stores. Now as an international professional speaker and business consultant, I help other small business owners achieve this same success. Here are my five tips to help you avoid business sale pitfalls, disappointment and lost money.
Mistake #1: Not planning ahead or waiting too long to sell
Waiting too long, or not planning in advance, can cause many business owners to miss their window of opportunity. It takes an average of two to four years to sell a small business. Therefore, long-term planning is key to any successful business sale. By keeping updated records, a detailed business history and sales portfolio on hand at all times, it will make your planning pay off. You just never know when that perfect buyer may walk into your business and make you an offer you just cant refuse.
Mistake #2: Not finding the right person to represent your business
Finding the right broker and/or consultant to help you sell your business is crucial to your success. Often business owners go with the first person they meet just to list their business and get the process going. This can cost you time and money in the long run. Within a few months, you may see no results and have to go on the search all over again. Taking time to interview many brokers and looking at a realistic outcome of what is expected will get you started in the right direction.
Take my advice; Im not using it! I signed up with the first broker I spoke with. He seemed like the perfect person to sell my business. After all, he had a background in retail and that was my industry, he was friendly and best of all he came up with a BIG price tag. Unfortunately, it was too good to be true because he was asking too much. By raising the price he got me to sign the contract but never made the sale. After six wasted months without even a lead, I finally decided to move on. Learning from my mistake, I interviewed 12 more brokers before signing another contract. The new broker had a more realistic approach and started to bring me leads within the first month.
Mistake #3: Thinking you dont have to promote or market yourself
Thinking a broker will do all the work in promoting your sale can be deadly. You are the best promoter for your business. Who knows your business better than you? No one is more motivated, passionate and knowledgeable about your business than you! A broker may be getting you some activity, but you continue to promote as well.
After becoming frustrated that leads were not developing, I realized that I had to be a promoter of my own business sale. But, the trick was to promote a sale without getting it out in my community, my customer base and my employees. How was I going to do that? Where do I find people that would be interested in purchasing my type of business?
After I brainstormed for ideas, I discovered a way to do this. Realizing that my sales associates might make the first contact with someone that was interested in opening a retail store - I went to the source. Again I asked myself the question, "What makes sales people take action?" Money! So I sat down and wrote a letter explaining why and how I wanted to sell my successful business. I offered a bonus to my sales associates to send me a buyer. Instantly the phone started ringing and more leads came in. Within a couple of weeks, I had created such hype that I had three different buyers working on buying the business at the same time.