Mistakes to Avoid When Selling a Business in BC

Selling a business can be a bittersweet venture. After all, you are parting with the outcome of years of hard work, research and dedication. At the same time selling a business is an exciting time full of opportunity. If you are planning to sell it is not as simple as cashing a cheque and handing over the keys to the kingdom.

The sales process involves months of due diligence, a mountain of paperwork, timed submissions, valuations and the hand-off process. One simple mistake when selling can lead to serious delays and even the possibility of legal consequences. Make the selling process efficient and accessible by avoiding some of the top mistakes faced by business owners.

Take it From a Business Broker: Common Selling Mistakes and How to Avoid Them

No matter the size of your business, there is always room for error. Working with a business broker will help sellers navigate the more complex processes of a sale while working within your best interests. Whether you are a large company with hundreds of employees or are a small business, BC owners should have access to the same resources.

The size of a business doesn’t change the main goals of a sale:

  • to achieve the highest possible sale price
  • reasonable timeframes for completion
  • a smooth transition
  • a prospective buyer who is as passionate about the industry
  • all while keeping the pending sale strictly confidential

Mistake: Not Asking the Experts

You may know your business inside and out but from the perspective of a potential buyer, it is uncharted territory. The pain points and advantages that seem obvious to you may be overlooked by someone coming in fresh. By enlisting a business broker you are gaining insight into marketing your business, what buyers want to hear, and valuable guidance before, during and after the selling process.

Mistake: Not Preparing Your Business For Sale

In the same way that you would stage a high end home for sale, your business should be as appealing as possible when hitting the market. When confronted with a complicated view of a business, potential buyers may be thrown off or require more time to clean and navigate the landscape of daily operations, projections and current revenue streams.

Buyers are more likely to step into a new role or commit to a sale when there is less need for preparation on their part. In-depth preparation can also attract more serious buyers and puts businesses in a better position to achieve a higher sales price.

Mistake: Not Having a Professional Valuation of Your Business

As a business owner, particularly a small business owner, it can be difficult to put a price tag on your company. Many owners refer to their businesses as their “baby” and more often than not it is an accurate comparison. You spend years nurturing, growing and evolving your brand, which leads to a sentimental attachment. It is this bias that makes it difficult to properly assess what your business is worth. An expert will consider the current condition of your business and provide a valuation without having to outlay expenses. Don’t feel like you have to sink costs into your business just to raise the listing price. An experienced broker will provide a thorough valuation of your business as it is in the current moment, as well as offering up suggestions for optional upgrades where available.

Experts such as lawyers, accountants and brokers will create a thorough valuation of your business by removing the emotional aspects and focusing on quantifiable criteria. These criteria include earnings, assets, competitive analysis, metrics of value, as well as predictions and potential of growth within a given industry.

Mistake: Not Vetting Buyers

You wouldn’t purchase a business without thorough due diligence, so why should selling be any different? There isn’t much sense in spending your time, energy and resources touring businesses and providing information to a potential seller who isn’t able to secure funds or hold a title.

Pre-qualifying checks can help to separate serious buyers from those who are looking to “kick tires”. The main focus of due diligence at this stage often revolves around a thorough review of financial records. It is always best to consult with a professional as to which checks should be done and when. Waiting too long to qualify a potential buyer can result in wasted time.

Mistake: Not Creating a Transition Plan

Finding a viable buyer is a key aspect of selling a business but what happens afterward? The success of a business is often rooted in consistency. As a business changes hands it can throw off daily operations and create discomfort with employees.

Creating a transition plan ensures that everything runs smoothly. Create a timeline in which you can share important information with trusted staff members, as well as the new owners. During this time period it is a good idea to document your processes. Written procedurals can be shared both with current staff and new owners.

Is it Time to Sell? Contact a Professional Broker

The best way to avoid mistakes is to enlist an expert at the beginning of your sale. They will help to guide you through the process, set expectations and complete and submit all of the necessary paperwork. In addition to the above mentioned issues, there are plenty of other potential risks during the sale of a business.

Brokers, financial advisors, attorneys and valuation experts will guide you through the process, not only for your own benefit but for all stakeholders involved. Let an expert provide an honest presentation of your business, create appealing listings and negotiate on your behalf.

Mistakes to Avoid When Selling a Business in BC