Selling a business is not easy. Each deal has its challenges and nuances. That is why I love what I do, and know how valuable our service is at Transworld.
Do you think you place an advertisement somewhere and the perfect buyer will call? I wish it was that simple.
While many entrepreneurs build a successful business through vision, excellent management skills and sheer hard work, most do not have a thorough understanding of the complexities and factors that are present in the deal structuring and business selling process. Plainly said, “It’s a jungle out here, and you need a professional tour guide”!
Here are some of the most common pitfalls when trying to sell your own business:
1. FAILURE TO MAINTAIN CONFIDENTIALITY
If you let the “cat out of the bag” too early it can be dangerous! If employees know that you are selling and changes are coming, they may quit or become less productive. Competitors may use this information as a selling tool against you. Vendors may not continue to extend you favorable terms. Make sure all potential buyers sign confidentiality agreements prior to meeting with you.
2. FAILURE TO CONTINUE TO RUN YOUR BUSINESS
It is important to maintain your business at peak operating capacity. If you try to sell your business yourself, you may have hundreds of buyers call you, and most are “tirekickers”. The time wasted with these buyers takes your eye off the ball and leads to lower profits and market value. All buyers will seek the latest P&L statement just before closing. If sales and profits are down, the buyer will most likely try to give you a major “haircut” on the selling price.
3. FAILURE TO USE PROPER NEGOTIATING TECHNIQUES
Poor negotiating techniques can cost you considerably in terms of selling price, terms and other opportunities. You shouldn’t have to be the “bad guy”, an intermediary can best negotiate for you. Many times a deal will fail to close because of poor negotiation and communication skills between the parties. Pro-Athletes (most anyway) understand the importance of a skilled negotiator.
Bottom line is you need one too.
4. FAILURE TO SECURE QUALIFIED BUYERS
Knowing how to qualify a buyer is critical. We can help you pre-qualify each buyer to avoid a negotiation that is doomed to fail. This saves you time and money. The best buyer is one that will close, not always the one with the most cash!
5. FAILURE TO MOVE THE DEAL ALONG
A good deal is like fresh fish. The longer they sit around, the more they stink.
While you focus on running your business, we can be there on a daily basis quarterbacking your deal to the end zone.
6. FAILURE TO PLACE THE PROPER VALUE ON YOUR BUSINESS
A business has value to a buyer because of its anticipated earnings from its established resources, and has demonstrated a successful track record. Proper evaluation is crucial, enhancing the chances of selling. You need to have the right price, so as not to scare off potential buyers while at the same time, maximizing your eventual price. It is a proven fact that an intermediary can sell your business for more!
If you can’t wait until next week for Part 2, email Andy for the rest of the article.
Andy Cagnetta owns and operates Transworld Business Advisors. He joined the company as a sales associate and later purchased it. Transworld is an international franchise business and franchise brokerage, with thousands of businesses for sale and franchisees in the United States and Internationally.
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