Sellers can make mistakes, just like everyone else. This article explores some of the most common ones that brokers see, along with some of the repercussions.
1. Not Seeing the Buyer’s Point of View
The first major mistake that sellers make is that they simply fail to look at the situation from the buyer’s perspective. One of the smartest moves any seller can make is to step back and ask themselves two key questions.
“What information would I expect to see if I was thinking about buying this business?
“Would I trust the information being presented to me if I was the buyer?”
These two simple questions help a seller understand a buyer’s perspective. Additionally, taking the time to appreciate a buyer’s position can help avoid a range of problems and help smooth out the negotiation process.
2. Neglecting the Business During the Sales Process
Another seller mistake we see is that the seller neglects the business during the sales process. This can have significant negative long-term consequences. Sellers must maintain day-to-day operations as though the business is still theirs – because a) it is and b) it may remain that way for longer than expected because business deals fall apart all the time, and often at the last minute. The old saying, “Don’t count your chickens before they’ve hatched,” most definitely applies to selling any business.
3. Overall Lack of Preparation
Any seller who is truly serious about selling his or her business will have all of their documentation available and well organized. This list includes financial records, environmental studies, business forecasts and more. It is important to make a good impression and convey to prospective buyers that a business is well organized and ready to be sold. Disorganization on any level could make prospective buyers worry that the business isn’t being operated in a professional manner.
4. Holding Misconceptions Around a Business’ Value
Finally, a real “deal killer” can be when sellers don’t understand (or have a mental block about) the real value of their business. This leads many business owners to set a price that is simply too high or even completely unrealistic. Many sellers have put years of blood, sweat and tears into a business. Learning that their business isn’t as valuable as they had hoped can be an emotional, psychological and financial blow all in one. But sellers also have to adjust to the realities of what the market will bear.
Avoiding seller pitfalls is incredibly important. Working with a skilled and proven business broker or advisor is a way for buyers and sellers alike to avoid an array of significant problems that could otherwise arise.
Copyright: Business Brokerage Press, Inc.
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