The vast majority of businesses that go on the market for sale never complete a transaction. External factors, such as credit markets or the overall economy, can help determine whether a deal happens. Still, generally, the most important factors impacting a sale are directly under the owner’s control. Unprepared owners can make costly mistakes when selling their businesses.

 

Know the value of your business

Develop a range of values for your business before entering the sales process, so you can determine a reasonable selling price and compare it to what you need.

• Is the value you placed on your business based on numbers or your emotional attachment?
• How much are you willing to negotiate, and do you have a price you won’t go below?

 

Market to a range of buyers

Understanding various buyers’ respective criteria can help you more effectively market your company to their interests early on and better understand why they offer the price and terms they do.

• Do you intend for the new owners to maintain the staff, the organizational structure, and the location?
• Do you want someone who sees growth potential, a way to increase market share, and expansion opportunities?

 

Plan for life after the sale

Some owners may have as much as 90% of their net worth tied up in their business, haven’t saved adequately outside of their business, and haven’t planned for life without work, which means that when it comes time to sell, they’re in for a lifestyle shock.

• Have you considered how much money you need from the sale—considering taxes and fees that you’ll owe—to live comfortably in retirement?
• What plans have you made for daily living and a retirement lifestyle that doesn’t include waking up to the daily grind?

 

Adapted from Axial2

 

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2 https://www.axial.net/forum/avoid-7-mistakes-selling-business/