Planning to Sell Your Business Someday? Not If You Make These 3 Mistakes!

Posted by Chuck Kocher
On April 21, 2024

Planning-to-sell-your-businessIf you’re a business owner you may have worked hard and grown your business in the hopes of selling it one day—either to fund a new business venture or to fund your retirement. It’s a great dream, but according to a recent Forbes article, there are three things that can keep your dream from becoming a reality. You can read the article here, but here are the big “deal-breakers.”

  • Inflated Price: Small business owners are often passionate about their businesses. That can lead to unrealistic expectations when it’s time to sell. It’s their “baby” they’re selling. They firmly believe in the business’s potential. And sometimes they have a figure in mind that’s not based in reality. What’s your business really worth? Have you had it independently evaluated by someone who doesn’t have a vested interest?
  • Inadequate Financial Records: Small businesses tend to be run by entrepreneurs who are great at ideas and even execution—but may not pay close enough attention to financial record keeping. The upshot is that it’s difficult to prove the financial viability of your business without solid financial records. Without good financial accounting it’s hard to convince a buyer that you’re a good company. This isn’t an insurmountable problem, but it’s one you need to tackle well in advance of any attempt to sell your company. What kind of shape are your books in?
  • Sinking Sales: If your sales are declining, that’s often a sign to a buyer that you’re in trouble. It makes your business less attractive—at least at the price you’re hoping to get. Sometimes this happens when an owner stays in the business just a bit too long. The energy to drive sales just isn’t there. It’s hard to sell a business if you have one foot out the door. The time to sell is when things are still on an upswing. That convinces buyers that there is still opportunity there.

If you’re thinking about selling your business at some point, make sure you take steps now so that you’re ready when the opportunity presents itself. What are your biggest questions or concerns about the possibility of selling your business? Leave me a note in the comment section and let’s chat about it!