4 traps to avoid when selling your company

4 traps to avoid when selling your company

Tuesday February 21, 2017,

3 min Read

For every entrepreneur, his business is his baby, and saying goodbye to something so close to your heart is always difficult. Entrepreneurs may take years to develop a unique idea on which they build their entire business. Putting years of hard work on sale is never an easy task. They might inadvertently make mistakes they might not have even thought of. Most entrepreneurs don't expect the exit from their company to be an easy one. However, many are taken aback by how difficult it is to sell a business for a good price in an equitable timeframe, especially in the existing economic environment. Here are a few traps you must avoid while selling your company:


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Not being prepared

You cannot simply wake up one day and decide to sell your business at the soonest. Selling a company that's built on years of sweat and toil takes more than just an experienced group of professionals. You need to plan a proper exit strategy for yourself and for your employees if needed. You also need to focus on issues that are eating into the revenue of your organisation so that when potential buyers are interested, they don't quote a lesser value.

Running a one-man show

The more indispensable you are to your business, the lesser its value will be when you decide to sell it. Make sure your company can function without your presence. If there are employees who show potential for handling higher positions, train them well. Ensure you're not the only reason behind your company's success as the lesser your business relies on you, the more it is worth to a potential buyer. When your company starts to run smoothly even without your expertise, that's when you know you can put it for sale in the market.

Being overconfident

Since your business is so close to your heart, you are bound to believe that you will get the best price in the market for your company. However, in the real world, the worth of a business is determined based on quantifiable criteria and not the owner's estimation of its worth. Be confident about getting a good price for your business but don't let your confidence come in the way of rejecting an offer that is below your estimated value. Involve a third-party organisation or visit business-for-sale websites to get a fitting valuation of your company.

Not hiring professionals

You might be great at running your business but it is best to leave the task of selling it to professionals. Hiring business brokers is important while trying to sell your company because they can competently handle tasks like preparation, showing the business to potential buyers and marketing and negotiation. You might be averse to paying 10 percent brokerage fee, but in most cases brokers are capable of adding at least 12 percent to the final sale price. Also, leverage the expertise of lawyers and financial consultants as bringing them on board will get you a secured and safe deal.

As mentioned earlier, it is easy to fall into one of the above traps while selling your company as your business is your baby. The result of it will not only put years of your hard work down the drain, but it will also affect your employees adversely.

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