Benchmark Business Group

How to Mess Up the Sale of Your Business

August 22, 2023

If your business is for sale, or you’re thinking about selling – Congratulations! It’s a big decision and one that comes with lots of emotion. Our best advice for Sellers is – DON’T MESS IT UP! This advice comes with a smile and the belief that if you know what to watch out for – you can prepare yourself to avoid it.

Three ways to mess up the sale of your business:

Not Responding Quickly: Speed is your best friend when working with buyers. Sellers who drag their feet, can’t make decisions, or are unresponsive to buyers’ requests for information can be sending the signal they aren’t serious about selling.

Solution: Before you put a For Sale sign on your business make sure you have your business information organized and ready for buyers to examine. By proactively preparing you can readily respond to buyer requests without delay.

Tip: Read our Seller Insights article How Time Can Kill A Business Sale to discover what type of information buyers want and to learn strategies for engaging buyers who ask for more information.

Thinking Win/Lose: As you are going through the due diligence process and engaging in negotiating some of the finer points of your sale it’s essential to remember that a business sale needs to be a win for the buyer and the seller. Getting hung up on low value decisions, like who gets the lawn mower, or the picture hanging in the conference room is a sure way to dial up emotions and dig a hole you may not get out of.

Solution: Keep focused on the big picture (not the one in the conference room) and remember the goal is to sell your business, not get into a low value tussle that leads to drawing a line in the sand you refuse to cross. Recognize that both sides give and take in a negotiation, and everyone needs to feel like a winner at the closing table! Read our article 5 Tips to Negotiating A Win-Win Sale.

Tip: Make sure you walk through your business and identify what items will be excluded from the sale and if possible, remove them from your business. If you can’t remove them, make sure the list is in writing and provided to your buyer during initial negotiations, prior to accepting any offer.

Letting Performance Dip: Any decline in business performance is a red flag for buyers. If buyers see that your business is not consistently producing, or is having trouble, it may cause buyers to question the ongoing viability of your business, as well as the asking price. Even after the buyer signs a definitive agreement, when you might think you can relax, there are usually several more months until a closing can take place. During that time, you will most likely be contractually obligated to “operate the business in the usual manner.”

Solution: Keep your foot on the gas pedal of your business! Pay special attention to keeping your business running smoothly and profitably until the sale is concluded.

Tip: Be even more diligent in tracking the key activities that drive the success of your business. For instance, lead activity, conversion of leads to sales, average amount of a sale, and maintaining healthy relationships with key customers and vendors.

To learn more about how you can be prepared to win at the closing table – review our library of Seller Insights Articles and explore our Seller Insights online learning for business owners.

« Back

Receive Seller Insights by email

© 2024 Benchmark Business Group. All rights reserved.