According to the Small Business Administration, there are approximately 22 million small businesses throughout the United States. If you're a proud entrepreneur looking to sell your small business, the process of actually finding a buyer and getting the best price can be overwhelming. Here are three of the most common mistakes that entrepreneurs can make when selling their small business – and how to avoid them:
Selling For The Wrong Reasons
From the joy of actually enjoying your retirement to a sudden and unexpected illness, there are many reasons why entrepreneurs decide to walk away from their small business. In many cases, the reasons behind getting out from under this massive obligation are sound.
However, there are other times when you should reconsider walking away from a venture that has been profitable in the past, and has the potential to continue making you money.
For example, if you're simply losing passion for your small business, try to find another way to remain involved. Finding a partner to take on the day to day operations can allow you to pursue other ventures, while still allowing you to profit from your past hard work.
If you've become overwhelmed with your business or it is beginning to disrupt or completely destroy your personal or family life, hiring a second in command or a few additional employees is also another way to ensure you can still enjoy running your small business without sacrificing your family or relationships.
Selling your business isn't an easy decision, which is why you need to examine your motivations to determine if there are alternatives, especially if you are walking away from an opportunity of a lifetime.
Selling to the Wrong Buyer
You spent years building your small business from the ground up, and if you have any employees, chances are their continued financial success is one of your top priorities. This is why it's important to avoid the second mistake many sellers make: handing their company, and the employees' futures, over to the wrong person.
Getting top dollar for your business is also still very important, which is why it's important to first get at least two or three offers. Next, research each potential buyer to determine if they have the experience, capital and business savvy to manage your small business.
Finally, if you've found a buyer that seems perfect, Investopedia recommends doing a little digging to ensure they are pre-qualified for financing. Once you're secure with the seller's finances, come to an agreement on the price that is fair, but also reflects what your company could be worth in the future.
Having Inadequate Legal Representation
From creating an effective business plan to applying for various permits or negotiating shareholder agreements, as a small business owner, chances are there are many legal tasks you've taken on by yourself. However, when it comes time to negotiating a fair price for your business and making sure that all of your assets and employees are treated with the utmost care, it's vital to work with a corporate attorney.
There are many minor issues that can arise during the price negotiations and ultimate sale of your business that can turn into a huge catastrophe if you don't have adequate legal representation. This is why it's vital to work closely with your attorney to ensure that every aspect of your sale is performed fairly, and legally.
The decision to sell your small business isn't an easy one, and between finding the perfect buyer to making sure your employees are treated fairly, the whole process can seem overwhelming. However, with the right strategy and an amazing corporate attorney, it is possible to sell your small business without too many headaches! You can also choose to read more here.
Share17 August 2015
My name is Noni. When I was in college, I was hit by a car while crossing the street. My life was never in danger, but I did break a few bones and had a lot of huge medical bills. I was hoping I wouldn't have to get involved with an attorney, but unfortunately, it came down to that. I used a family friend who is an accident attorney to get some compensation. A few years later, I was hit while riding my bike and had to go through the same process. I suppose I'm lucky to be alive. And it's thanks to accident attorneys that I have been able to put my life back together. I started this blog as a way to let others know just how much lawyers can help you in certain situations.