Avoid These 3 Mistakes When Selling Your Business or Startup

“Win or Learn – That Way You Never Lose”

If you are planning to sell your business, and especially if this is your first time, you must be getting a little overwhelmed with all the advice you receive from all corners. Are you wondering if there are any common mistakes that you can avoid? You are right. We have worked with thousands of business owners over the last 9 years and in this post, we share with you the 3 most common mistakes most business owners make when selling a business, and how to avoid them.

Top 3 Mistakes To Avoid When Selling Business or Startup

 

1. Not Accounting for Sale Preparation:

Even if you are a pro when it comes to selling your products and services, selling your business is not nearly the same and requires extensive preparation, commitment and resources. So, don’t rush into this. Start preparing from day 1 when you decide to sell your business. We have seen business owners being forced to lose clients, accept a lower valuation, lose control of business and go through unwanted frustration –simply because they didn’t give themselves enough time.

Our post here tells you how to prepare your business for sale. This preparation includes creation of second line management and delegation of important responsibilities, establishing and consolidating systems, policies and structures, sorting out financial and other documents / records, creating mechanisms to manage existing clients without disrupting long-term contracts, and so on.

Then comes the second stage of preparation, when you will have to prepare in order to build solid confidence in prospective buyers, which encompasses activities like preparation of business teaser, buyer information pack including valuation report and more. Being prepared also shows the professionalism of your company in the minds of investors. 

2. Poor Choice of Buyer Outreach

How do you attract prospective buyers without upsetting customers and employees? There are two important things to remember here – ‘targeting’ and ‘confidentiality.’
Many of our users tell us how they wasted precious time and money on ads in newspapers and magazines – without much results. Why? Because ads are less likely to give you the targeted reach that a technology platform like Indiabizforsale.com does. At the end of the day, you will have higher chances of finding a deal on a platform that brings together thousands of buyers, investors and businesses. Secondly, it’s best not to give away the identity of yourself or that of your business until you know that other side is genuinely interested. When you tap into your personal network, chances are that word spreads and reaches your customers too. Ideally business identity should only be revealed to buyers and investors who seems capable and with serious intent. 

3. Quoting an Unrealistic Valuation

In our experience, unrealistic valuation is one of the primary deal-failures. Over-pricing your business makes it unattractive to a buyer right at the outset. Not to mention, your integrity becomes a question. Buyers and Investors do not show interest in deals which they feel highly overpriced, if you do not have even initial interest for your company, how would you negotiate on the table. Now, many business owners don’t over-price their business intentionally – they simply don’t know the right valuation for their businesses. The way out? Get a professional business valuation report.  Valuation estimate should be done unbiased way for your company as a going concern and then only it shall withstand the scrutiny of buyer and investors. Ideally you can have 10% buffer (higher) for the eventual negotiation, more than that would actually hamper your chances of even getting interest for your business.

So, what are you waiting for? Start preparing to sell your business and stay tuned to our blogs and other resources to help you along the way.

If you require professional advice on any aspect of business transaction, you can book expert (paid) consulting call for 30/60 mins from here. 

Leave a Reply

Your email address will not be published. Required fields are marked *