Every business sale will come with some unavoidable challenges—but how you deal with them can influence if they can be overcome. Your goal should be anticipating potential issues and difficulties, but what are they? Below are some of the most common challenges businesses face when they try to sell and how you can overcome them.
-
Timing the sale
A popular consensus among entrepreneurs is that timing is everything. Finding the ideal time to put your business on the market is a universal challenge for business owners, particularly because there are many variables to consider. Everything from current market conditions, economic trends, geopolitical risks, and even the owner's personal circumstances impact the timing of the sale.
When the market is favourable, you can make a decent return on your investment when you sell your business. This is often one of the biggest things you should look for when deciding when to sell. The thing is, there may never be the right moment to put the business up for sale. So, we look for the most favourable conditions.
-
Determining the business's true value
This challenge is multifaceted. It’s common to find overvalued businesses whose price tag is based on the owner's perceived valuation due to their emotional attachment to it. Business owners put years of their hard-earned money, time, and effort into developing a business, so much so that when it comes to selling it, they factor these aspects into the business valuation.
However, a business valuation doesn’t solely rest on how many years you’ve owned it or how much money you’ve pumped into it; it depends on the business's financial health and current market value. To overcome this challenge, it's best to take yourself completely out of the picture and have a professional do a business valuation. At least this way, there’s no bias or inflated valuation, and it will give you a more realistic picture of what your business is worth.
-
Finding the ideal buyer
It’s natural for a business owner to want their business to go to someone who will continue to grow and cultivate their business past the level they could. Not someone who will strip it for parts and leave the employees stranded.
While finding a buyer who legitimately sees the vision of the business and wants to see it grow is possible, you may need to wait a while. This is where hiring a business broker helps. Most reputable brokers have a decent network of investors with whom they can present your business. With their connections, they can place your business in front of the right audience, increasing your chances of finding the right buyer sooner.
-
Meeting legal requirements
Having bought or registered a business, you’re probably aware of some of the legal and regulatory requirements of selling a business. Ensuring you comply with legal requirements while you sell your business can save you time and money. Brokers are generally well-versed in the legal requirements surrounding the sale of a business and ensure that you remain compliant at every stage of the sale.
-
Maintaining confidentiality
In order to find prospective buyers, if you don’t have any lined up, you need to market your business, which means some people will be privy to sensitive information. You need to ensure you maintain confidentiality as much as you can. The confidentiality surrounding the sale of a business is important for a few reasons. Firstly, leaks and rumours can adversely affect the business's value, reputation, and employee retention.
Ideally, if you’re selling your business, you want to keep sensitive information confidential until you hit the final stages of the sale. Selling your business by yourself means it can be difficult to keep things quiet. When you hire a business broker, they will deal with the sale of your business as discreetly as possible. This is the best way to ensure you have a successful sale.
-
Negotiating the sale
Negotiating the sale of your business with potential buyers can be a delicate process. Ultimately, you want to get the best return on your investment, while the potential buyers want to make a wise investment that will result in a return later on. Both parties must be flexible and patient to reach a successful settlement. If you hire a broker, they know how to negotiate settlements to ensure both parties receive the best outcome.
-
Managing the business and the sale
Finally, business sales can be extremely stressful, especially if you’re trying to manage it yourself. Factoring in the marketing, paperwork, legal requirements, and negotiating with investors makes it extremely difficult to focus on your business. Selling a business also comes with some emotional challenges.
For example, if you’re selling to invest in another venture, fear of a lack of income or failure could creep in. In this case, it's wise to seek support from those close to you or even a professional until the business sale is complete.
Hire a Broker
While it’s possible to manage the sale of your business yourself, you’ll still need to seek professional help somewhere along the way, so why not hire a broker from the start? If you need assistance selling your business, check out this page from Lloyds Brokers. Here, you’ll be linked to a business broker with the experience and expertise to help you get the best price for your business and make the whole process a lot smoother.
Final thoughts
The sale of your business can go smoothly and without an issue, granted you know what to do when challenges arise and how to navigate them. Consider the challenges other business owners have gone through above and how you can work around them. Ultimately, the goal is to get a favourable return on your investment, right? Well, by limiting your mistakes and hiring a professional business broker, you can maximise the return you’ll get.
