Sellers can make mistakes just like everyone else. Knowing what some of the most common seller mistakes are – and what the repercussions can be – may help you avoid making these errors in the future.
- Not Seeing the Buyer’s Point of View
The first major mistake that sellers make is that they 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 were thinking about buying this business?
Would I trust the information being presented to me if I were the buyer?
While there are many other questions sellers can ask to help reframe their thinking, these two questions can orient a seller’s thinking towards a buyer’s perspective. Additionally, investing the time to understand the buyer’s position can help avoid a range of problems and help smooth out the negotiation process.
- 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 understand that they must maintain the day-to-day operations as though the business is still theirs. The old saying, “Don’t count your chickens before they’ve hatched,” most definitely applies to selling any business. Business deals fall apart all the time. This is true from small deals to corporate acquisitions.
Is your business exit ready?
If you’re planning to exit your company in the near future, you may find EastWind’s Exit Strategy Playbook helpful in developing your own exit strategy, making your company more sellable.
- Overall Lack of Preparation
Any seller who is truly serious about selling his or her business will have all their documentation available and well organized. This 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.
- Holding Misconceptions Around a Business’ Value
Finally, a real “deal killer” can be when sellers don’t understand (or have a mental block concerning) the real value of their business. This issue can lead 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 merger and acquisition advisor is a way for buyers and sellers alike to avoid significant problems that could otherwise arise.
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Republished with permission from Business Brokerage Press Inc. Photo credit: iana_kolesnikova via Adobe Stock
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