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8 Common Mistakes To Avoid When Selling A Small Online Business
By Quiet Light
Selling your small business is an exciting event for any business owner. In addition to potentially transforming your financial situation and opening up free time for new pursuits, a successful small business sale represents the culmination of years of hard work, persistence, and ingenuity.
“Selling your small business is an exciting event for any business owner.”
When you are thinking about how to sell a small online business, it is important that you are aware of common mistakes business owners make.
How To Avoid Mistakes When Selling a Small Business
Many sellers take advantage of their resources, attend carefully to every detail, and experience a smooth and successful sale. Unfortunately, others make mistakes that cause stress and reduce potential profits.
Eight of the most common mistakes you should avoid when selling a small business include:
- Exposing your business to risks
- Forgoing professional help
- Failing to prepare the online business for sale
- Choosing the wrong time to sell your small business
- Incorrectly valuing your business
- Publishing incomplete or inaccurate marketing materials
- Choosing the wrong buyer
- Failing to negotiate
Exposing Your Business to Risks
Before you can even begin the process of selling your business, you need to own a business that is sellable. While there are many things that investors consider, one of the most unappealing factors is risk. If your business is exposed to significant risks, buyers will likely be less interested. Identify potential risks, take mitigating actions, and create a sellable business.
“Before you can even begin the process of selling your business, you need to own a business that is sellable.”
Forgoing Professional Help
Even though you are an expert at running your online small business does not necessarily mean that you are an expert at selling your business. The right business broker can simplify the selling process and help you receive the maximum value at closing. The right business attorney can provide you with clarity in your legal contracts and agreements and confidence in your exit plan.
Failing to Prepare the Business for Sale
If your business is disorganized, missing documentation, or heavily reliant on your personal identity, it is likely lacking in the transferability that makes businesses appealing to investors. In order to prepare your business to be sold to new ownership, ensure your documentation is clear and your business is easy to operate without your involvement.
Choosing the Wrong Time to Sell Your Small Business
If you list your business for sale at the wrong time, you risk losing out on substantial profits or diluting the interests of buyers. There are many things to think about when choosing when to sell your business. The most favorable times to sell are when your business is experiencing strong growth and when your business is approaching the busiest time of the year.
“If you list your business for sale at the wrong time, you risk losing out on substantial profits or diluting the interests of buyers.”
Incorrectly or Insufficiently Valuing Your Business
The value of your business is based on valuation metrics such as the Seller’s Discretionary Earnings (SDE), business growth rate, profit margin, and number of revenue streams. But quantitative measurements are not enough to properly value a business. Qualitative aspects like transferability are key considerations for determining the value of your business.
Publishing Incomplete or Inaccurate Marketing Materials
Although it may be tempting to only present the most attractive qualities of your business, it is critical that you are open and transparent when representing your business. Any attempts to conceal or omit the challenges your business faces will come to light in the due diligence process, destroy trust, and ruin the deal. Make sure your marketing package is thorough, detailed, and comprehensive.
Choosing the Wrong Buyer
Even though you may be tempted to sell to the highest bidder, it is important to put your business into the hands of someone who will operate it successfully. Hopefully these two are one and the same. The right buyer is someone who has the industry skills and expertise, is committed to closing, has strong funding sources, is trustworthy and respectful, and agrees to the purchase price and deal terms.
“Even though you may be tempted to sell to the highest bidder, it is important to put your business into the hands of someone who will operate it successfully. Hopefully these two are one and the same.”
Failing to Negotiate
Many sellers are prepared to negotiate a favorable purchase price, but not everyone thinks about negotiating favorable deal terms. The conditions of the sale greatly impact the way in which you spend your time. You will receive more value if you negotiate both price and conditions that suit your goals.
How To Sell a Small Business with Quiet Light
Quiet Light is one of the first online business brokerages to exist, and we are also the most experienced. From our founder to our newest team member, every advisor at Quiet Light Brokerage has built, bought, or sold an online business. Most of us have done all three. When you choose to sell with Quiet Light, you’ll know you’re exiting at the right time, for a fair price, and with the confidence to carry you into your next venture.
To take the first step in selling your small business, discover the value of your online business with a free valuation, no strings attached.