Don't make these 10 mistakes when trying to sell your business quickly
Selling a business fast means avoiding any mistakes as possible, read these guides to help you find a buyer at the highest price possible
I am aware of how difficult it can be to say goodbye to your baby when the time comes. You invested a lot of time and energy into building your business, but now you want to sell it because you may be ready to retire, have a new business idea, or need a lump sum of money. This puts you in a tight spot as you try to figure out how to sell your business as quickly and for the highest possible price, but you may have been thinking, "I have a gold mine that will sell in no time I've been there before, and I'll share with you the top ten mistakes I did when trying to sell a company quickly, along with how I lost thousands as a result.
On the other hand, I will endeavor to add some do and don't to this article. I will not only provide a list of the errors that were made, but I will also provide a more effective solution for each mistake that was made so that you do not have to sell your business at a loss.
Selling a business is not as easy as selling a house; not everyone may want your business. Even if your business is bringing in a good amount of net earnings each year, that does not mean that your business will sell quickly. The reason for this is that most buyers looking to purchase an established business are looking to either add it to their existing business or have some knowledge of the industry. With that in mind, the following are ten terrible ways to try to sell your business quickly: let's begin with the most obvious one.
1. Contacting your competitors
Bad idea: A lot of sellers believe that their competitors will buy them out as soon as they put their business up for sale because it seems clever and sounds like a win scenario. However, this did not happen to me when I owned a company in the past. My former business competition and I were also going after each other's accounts and lowering prices, and the only person who was winning was the customer. Despite this, I decided to reach out to my competitor and call him to ask if he would be interested in buying me out He said nope! Lacking interest, and can you guess what happened? He started going after my customers by telling them things like, "that company is trying to sell the business, so you will soon have a new owner of the business, and they might raise prices, etc etc etc," and the only way I found out about it was when one of my customers asked me why I was selling the business. It was very embarrassing for me, therefore ever since that situation occurred, I've learned to avoid situations like that in the future.
Good idea: Hiring a broker and having them intervene without your business being known it's for sale, how will this work you may say? Well once you found a business broker that will help you sell your business you can drop this idea… they go and reach out to businesses that compete or businesses that do that same service as yours and they will offer their services as a business broker, basically, by dropping their business card and saying hey I can help you expand by finding you small business similar to yours that may want to sell fast, this way your business identity is hidden and you can find a buyer to buy your business fast.
2. Telling your employees
Bad idea: Let's say you have 15 employees working for your company, and they are all team players who are dedicated to their work. They never miss a day of work, and they show up on time every day. However, because you are so excited about trying to sell your business quickly, you decide to tell them that you are selling it and are going to retire and cruise the world. What do you think their response will be? Yes, they most likely will be happy for you, but right now they have to start working through a lot of different ideas in their heads, such as who will become the new owner of the business. Will he terminate our employment? Should I start looking for new work? If your employees are allowed to entertain thoughts like these, you run the risk of seeing a decline in their work ethic and even seeing some of them stop showing up for work. This isn't because they don't want the job anymore; rather, it's because they don't want to take a chance on being jobless. Your best bet is to wait to disclose this information until the deal has been finalized.
Good idea: Your employees are the backbone of your business; they have been there from the beginning, through the ups and downs, the good times, and the bad. I once sold a business and had such a great employee that I structured him into the deal; I told the buyer that if they wanted the business they must assure me that the employee will stay for a certain amount of time and you won't let him go. Thankfully, four years later, the employee was still with that company, and my employee never knew anything until my final week with the business, and his face lit up when I told him that his job is secure for this many years.
3. Hiring just any broker
Bad idea: When the numbers are accurate and the foundation has been laid properly, selling a business may seem to be a straightforward process in which the new owner would just step in and take over operations. However, this is not how the process works...… Your company is similar to a romantic relationship; you might be attractive and charismatic, but that doesn't mean you'll end up with just anyone. The same is true for a business; the person who buys it will need to have some kind of connection to it, which is why we are going to talk about business brokers in this section. If you own a delivery route business and you happened to find a business broker who sold 80 businesses that are gas stations, then it may take them a while to find you a buyer. This is not to say that they won't use other expertises to sell it like marketing and advertising, but you are at a place where you are trying to figure out how to sell a business quickly at the moment, so every day is important to you. If you hire the wrong broker, this can be a crucial mistake.
Good idea: When selecting a business broker, it is essential to conduct interviews and ask as many questions as possible. You should also inform the broker about the sort of business you own and the type of buyers you are looking for... When trying to sell a business fast, the following are five questions that you should consider asking a business broker:
- Have you previously sold any companies that were comparable to mine?
- How many other businesses that were similar to mine have you been able to sell?
- Do you have a network of buyers that are interested in purchasing a business that is comparable to mine?
- Where do you plan on advertising my company?
- Will they sign a non-disclosure agreement?
4. Trying to sell in on your own
Bad idea: If you are an owner absentee business owner and you hardly contribute any time to the business, then you may be able to try and sell your business. On the other hand, if you are working in the business itself, then selling on your own is not a good idea and here are some reasons why...
- Finding a buyer cost money: You will be required to spend money on promoting it on markets such as Craigslist or other marketplaces that might start at a monthly fee of $75 for a basic listing.
- You will become emotionally disturbed: Let's say you meet potential buyers who express interest in your company but they continually back out on the deal, either because the price is too high or because they make comments that could be considered offensive to you regarding the business. This has nothing to do with you as a person, but the fact that you are attached to the company means that it could hurt, and this will only affect the way you continue to run the company until you find a buyer.
- A big distraction from your business: Since you are responsible for the daily operations of a business, which might be anything from a supermarket to delivery routes, you must avoid diverting any of your attention to other activities. Meetings, showings, negotiations, and back-and-forth communication are all going to be necessary when selling a business.
Good idea: As a business owner myself, I always choose my business broker to represent any businesses that I want to sell. We go over all the details upfront, such as the lowest offer I will accept, the financing details, and the best times to reach me, and then I allow her to do her work in finding me a buyer. However, let's say that I wanted to sell my business on my own. Here are some tips on selling a business on your own, as well as some tips on hiring a broker.
- Free marketing: Find online marketplaces that let you post free listings, which will allow you to test the market and receive feedback; in this way, you won't have anything to lose. Create a listing that is creative, unique, and attention-grabbing, and under no circumstances should you post sensitive information such as your company address or contact number; most online marketplaces use a third-party messaging tool, so even if buyers do reach out to you, they won't be able to see your email address or phone number.Click here to list a business for free
- Hire a business broker: The majority of business brokers include their commission in the price; thus, there is no reason not to select the right person. But finding the right broker is just as important as hiring the right employee for your company. The broker you choose should be dedicated and have a lot of experience in the field in which your business operates. Business brokers are somewhat comparable to real estate agents in that they use similar tools and marketing strategies to sell homes and businesses. However, one of the most important tools that business brokers use is the network of buyers that they build up throughout their careers.
5. Selling it to a family member
Bad idea: When you are desperately trying to sell your business fast and your business broker hasn't had any luck finding a buyer, you might think to start reaching out to your family members to buy your business. well, this may be a bad idea, and here is why, it is like selling your business but not selling it at the same time keeping it, that wealthy family member who will buy it from you may then lock you in with the deal here is how…
- Asking you to help fill in
- Asking you to intervene between him and an employee or salesman
- Asking you to wait on some of the payments from the financing ( read next part on 100% financing)
- Always calling you for advice
Good idea: Reaching out to family members with a large network and informing them of your intention to market your business quickly and asking if they know of any potential buyers will help you find a buyer rather than cause you the stress of selling to a family member. This is a smart way to use your family members to try to sell your business quickly.
6. Offering 100% Financing
Bad idea: To sell your business quickly, you can make hard judgments that you'll later come to regret. I've seen this happen a lot, and most of the time it didn't work out well. Some business owners understand how to operate their company very well and know how to turn a profit whether it is by cutting on inventory or always hunting for bargain deals by doing so this increases the net profit for the owner and this makes you believe that the new owner will follow your footsteps, so they may just offer 100% financing with 24- 36 payments which will allow them to exit the business quickly while getting paid at the same time. Sounds good, but what business owners fail to consider is the likelihood that the new buyer won't run the company as you did, and that the profit you were making they might not make due to a lack of initiative or skill, which will lead to you not getting your payments whether you have a contract that in place If you don't get your payments and decide to take back the business after they defaulted on the payments that business may not be as successful as it once was.
Good idea: The majority of business brokers advised it, and you can add interest on top as well. If you decide to give financing, offer no more than 25%–40% finance to obtain most of the selling amount. Offering funding is undoubtedly a great option when it comes to how to sell a business quickly.
7. Selling some of the business
Bad idea: You may receive an offer to sell me half of the business and you keep half from someone who may be a family member, an employee, or even a potential buyer while you are trying to sell your business. That sounds good, doesn't it? However, sometimes you have to sell your business because of circumstances that force you to leave something you watched progress from the ground up. This is how that usually works You'll receive money up front for the half you sold and get to continue working in the business. However, once the papers are signed and the money is exchanged, everything changes completely. You are now a 50/50 partner, which requires you to work twice as hard and forgo taking vacations at your discretion or arriving late to work, among other things, as doing so will only result in partner conflict.
Good idea: Selling full ownership of the company is a smart way to get your money and end your relationship with it, but if you love the company but have a temporary problem, you can always add a buyback agreement that the owner gives you first choice to buy back the company in a set number of years, assuming the new owner wants to do that.
8. Bad valuation
There is no right or wrong way to wrap up this section. Valuing a business is important, and it's always important to get multiple opinions when doing so. As the business owner, you likely have a set price in mind based on weekly gross sales and monthly net earnings. However, before you commit to that price, research the market and what other similar businesses are selling for. This will help you ensure that you priced it correctly.
9. Placing a for-sale sign
Bad idea: It's not a good idea to post a for sale sign on your business; unlike a house or car, businesses should typically be sold quietly. By posting a for sale sign, you run the risk of worrying your clients or customers; even if you're selling for the right reasons, like retirement, they might interpret it as a sign that you need money. or your Business is doing bad, And as we previously said, this will gradually result in the loss of your clients as well as your employees.
Good idea: Is all exposure beneficial when it comes to how to sell a business quickly? Yes and no. You want to advertise your company in areas where it will attract buyers, so it makes sense that you wouldn't want to put a for sale sign on your door or the back of your truck. So, here are some key locations to offer your business for sale.
Craigslist - A quick option to locate a buyer for your company is to post an ad on Craiglist; a 30-day listing costs $5.
Frees Marketplaces - finding business 2 business platforms that list businesses for sale for free is another method more platforms charge a higher fee but that all comes down to your budget here on Bizroutes.com a business listing is free.
Social media ad's- Making your ad stand out by saying "bread route sale making $3000 a week, work 4 days a week only" and adding the words "xxx finance available" may help you gain some momentum if you post a 30-day ad.
vendors -Talking to salespeople, warehouse staff, and any vendors you work with and letting them know you're searching for a buyer for your business might help you find a buyer quickly. This is because they are familiar with your company through the orders you place and can tell potential buyers.
10. Guarantee the new owner
Bad idea: You've had your business for years and, without a doubt, have made a lot of money from it. As a result, you are confident that anyone who purchases your firm will be really happy. Now that the time has come to sell it, you're getting responses from both the business broker and your leads. You are closing in on one buyer out of many who are bidding for your business, and you just can't help but tell him or her, "DONT WORRY, I GUARANTEE YOU THAT YOU WILL NOT LOSE WHEN YOU BUY THIS BUSINESS," which is a big no-no. Here is an example. You may get a call from the person who bought your business asking what happened with that guarantee you made if this happens... You own a well-known coffee shop in a good location with a healthy cash flow. You sold the business a year later and someone decided to open a coffee shop down the street, taking 80% of the business you sold. They might employ it against you!
Good idea: The most remarkable approach to selling a business quickly is, to be honest, and legitimate, and to avoid overselling; provide documentation so that the figures speak for themselves, and if they choose, let them leave a deposit and hold a guarantee for a week or two. Here's how it works.
How a business guarantee works
Example - Your business generates about $25,000 per week, give or take, and your net profit from that is $4000 per week. If a potential buyer places a deposit, you'll let them know that the business won't generate less than $20,000 per week and that the profit won't fall below $3000; if your numbers line up, they must proceed with the purchase; if not, they forfeit the deposit.
Conclusion: This article discussed mistakes to avoid making when trying to figure out how to sell a business quickly as well as some suggestions for how to do so. Since selling a business takes time, creativity, and most importantly, patience, the best course of action is to work with a business broker who has experience in your sector.
The guide on what not to do when trying to sell a business quickly should be of assistance to you and, more importantly, prevent you from making the same mistakes that I and my business associates did. Always remember to remain focused and not lose any energy when selling your business because doing so will only result in declining sales, which could end up costing you the entire enterprise.
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To the best of our knowledge, the information provided on this website is not intended to be taken as professional financial advice. Consult a professional financial or tax expert if you require this advice.