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Top five mistakes to avoid when selling a business

If you’re thinking about selling your business, whether it’s for retirement purposes or to invest money in your next venture, thorough preparation is critical to give you the best chance of a sale, at the best price - but many business owners simply don’t take the necessary steps.

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Find out what these are and how you can avoid making the same mistakes. The largest business sale website in the UK features around 59,000 businesses, so, if you're trying to sell your business, you'll be competing for the attention of buyers as much as, if not more so, than any other product or service you have ever sold.

To make it attractive, you need to apply the same principle as you would when marketing anything else: Understand what customers are looking for, and provide it. That's where the preparation comes in, and that's where we see the same mistakes being made over and over again:

  1. Not understanding the market value of the business. Having a value that can't be justified rules buyers out before they even talk to you.
     
  2. Not knowing why you make a profit. Your business is an investment for the buyer. They need to understand the why as well as the how.
     
  3. Still holding the keys. If the business does not run unless you turn up, it's worth much less to a buyer.
     
  4. Saying: ‘Can I get back to you on that?' If you don't a) know your basic numbers, b) have up to date management accounts and employment contracts etc, you trigger doubts in the buyer's mind. This really does affect value.
     
  5. Not appreciating why buyers may offer staged payments. Banks are increasingly cautious and are lending less money as a result. You need to understand that agreeing to a request for payment over time may be the only way you will get the price you want.

Of course, every business needs an individual assessment – but get the basics right and you improve your chances of a good sale significantly.

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About the author

Paul Dodgshon helps business owners prepare, market, and sell their businesses. He is a Regional Partner with The Business Partnership, which has been helping to sell businesses for 30 years. Take the Business Parntership's free sellability test to help you plan the future of your business.

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