Small business entrepreneurs have different reasons for selling their businesses. Sometimes, financial reasons rendered the owners with no choice but to let go of their brand. Other times, they received an offer they could not refuse. There are also times when the owner feels like it is time to retire or that their business will fare better in the hands of another entrepreneur.
No matter your reason for selling the business, there are numerous preparations you need to take. This is to ensure you are optimizing this time to get the most out of the sale. But if this is your first time selling a business, you are at a far greater risk of making these common business-selling mistakes.
Setting Unrealistic Expectations
Just because your business is making more money than usual, this can already sell at a premium price. Many things can drive your brand’s market value. You don’t want to turn off potential buyers just because of your unrealistically high asking price.
The same goes for thinking you can say goodbye to your business a few months after putting it on the market. Many things can slow the process down. Keep an open mind, listen to your team of professionals, and manage your expectations.
Forgetting to Dissolve Your Business Entity
Some businesses were formed using a sole proprietorship. This means once you sell the brand, the business will close automatically. But this is not applicable to businesses structured as a Limited Liability Company (LLC) or corporation.
Corporations and LLCs need the approval of all owners about the resolution to dissolve. There is a need to file the certificate of dissolution. The same goes for formalizing the business closing with respective taxing agencies.
Failure to dissolve your brand’s entity can result in a considerable amount of tax debt with the Internal Revenue Service (IRS). It is true that there are professionals that offer customized tax relief solutions to alleviate your business tax burdens. But why wait for the IRS to chase after you when you can avoid such tax-related problems by properly dissolving the business?
Not Having a Succession Plan
Long-term planning is crucial whether you plan on selling the business sooner or later. There are times when entrepreneurs will meet the perfect buyer at the most unexpected date. You want to make sure you have everything covered so that you won’t lose such a great opportunity to sell.
There is a need to have a succession plan in place even before you start the business. This way, you can be sure that the brand will be left in good hands when the time comes for you to walk away. This goes beyond training your successors on how to be great leaders.
If buyers see your efforts to ensure the business stays competitive while having a succession plan in place, this can help you set the selling price at a higher rate. You won’t look like just another desperate owner wanting to get rid of their business. It will be easier for them to see your brand’s potential and dedication to ensuring it stays successful no matter the market conditions.
Managing the Selling Process Alone
Some entrepreneurs manage to build their business from the ground up with minimal supervision from the pros. But that does not necessarily mean you should do the same when selling. There are many details you need to cover to make sure the sale goes as smoothly as possible.
You will likely need the help of the right broker or consultant to make sure you get to fulfill your roles in your business while selling it. You don’t want your business to suffer just because you handle the selling process on your own. The last thing you want is to face the repercussions associated with selling alone.
Take your time looking for the best professionals to help you in selling the business. This can be a local broker who has worked with other brand owners under a similar industry. Get in touch with your business attorney, and he can ensure you will be walking with no business liabilities and a bank account filled with cash.
Consult with a business accountant and have them review your records. They can ensure your business taxes are up to date and that you know the full breakdown of your purchase price. The same goes for working with an appraiser if you are selling all the equipment in your business.
You might be ready to walk away from your business and start life anew. You may already have another business idea you wish to pursue or wants to enjoy your retirement early on. Be sure to avoid these business selling mistakes if you want to get the most out of the sale.