Avoiding Common Myths When Selling Your Business

Selling your business is a complex process that requires careful planning and execution. As a business owner, it's important to be aware of common myths that can derail or seriously affect a potential sale. Here are some myths you should avoid:

Myth 1: I Can Sell It Myself
Many business owners believe they're qualified to sell their business without professional assistance. However, selling a business is not like selling a product or service. If you're looking to sell on your own, confidentiality is lost. Word of a potential sale can get out, leading to 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. Utilizing the services of a reputable business broker can save you time, money, and stress.

Myth 2: I'll Sell When I'm Ready
While personal readiness is important, 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. Timing is crucial, and it's important to consider the economic climate when deciding to sell your business.

Myth 3: I Know What it is Worth
Some owners will base the business value on what they need for retirement, dollar amount for each year they were in business "sweat equity," or industry multiples. However, determining the value of a business is more complex than these methods. A business broker 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 business's growth potential, not some vague industry average.

Myth 4: It's Like Selling a House
Selling a house is a straightforward process that takes a few weeks. However, selling a business is much more complex. A successful business sale usually requires a great deal of pre-planning, developing key staff, documenting operations, and controlling expenses. Even after the business is sold, the seller can be expected to put in at least some time for a smooth transition, helping to make the new owner a success. It's important to work with a business broker who has the expertise to guide you through the process.