Myth #1 – I Can Sell It Myself
Many owners believe they’re qualified to sell their business without
professional assistance. Many owners are entrepreneurs and the key
salesperson for the company. But selling a business is not like selling
a product or service.
If you’re looking to sell on your own, confidentiality is lost. If word
of a potential sale gets out, there are definite risks of losing
clients, employees and favorable credit terms.
Do you really have the time to run your business and compile marketing
materials, advertise, screen buyers, give tours and facilitate due
diligence?
When you’re looking to sell you want to put even greater emphasis on
running your business, boosting your sales and not taking on new
challenges.
Myth #2 – I’ll Sell When I’m Ready
Certainly, an owner wants to be sure he or she is mentally and
emotionally prepared to sell. But personal readiness is just one
factor. Economic factors can have a significant impact on the sale of a
business.
Sale prices can be affected by industry consolidation, interest rates,
unemployment and many other economic measures. Talk with a
professional and aim to sell when your personal goals and market
conditions align.
Myth #3 – I Know What it is Worth
Some owners will base the company value on what they need for
retirement. Others will tell you they want $100,000/year for “sweat
equity.” Still others utilize industry multiples.
A third party valuation is a good idea for anyone seriously considering
the sale of their business. An outside valuation will include a
thorough analysis of the business and the market it operates in. This
will provide a solid understanding of the company’s growth potential,
not some vague industry average.
Myth #4 – It’s Like Selling a House
Preparing to sell your house may take a few weeks, then you want to get
the word out to everyone that the house is on the market. Once you get
a satisfactory offer, you sign on the dotted line, turn over the keys
and move on.
Selling a company is much more complex. A successful business sale
usually requires a great deal of pre-planning, at least a year and maybe
as long as three years to drive sales, develop key staff, document the
operations and control expenses.
The average house will sell in less than four months, while the average
business sale is nine months to a year.
Even after the business is sold, the seller can be expected to put in at
least a few months, and possibly years of transition time, helping to
make the new owner a success.
Sound sale strategies will bring you the optimum price the market will
bear. Go to market with realistic expectations by getting a professional
valuation and using a professional business broker or intermediary.
