Small business owners are great at what they do. They own and operate a business that they have built into a success. When it comes time to put the business on the market, however, many small business owners make mistakes that will end up costing them a great deal of time, energy and money. How do you avoid these types of mistakes? Know what they are and how to avoid them. What follows is part one of a five part series that will help you avoid business seller blunders:
Procrastination and Business Life without an Exit Plan
If you want to sell your business the first thing you need to understand about the small business market is that business sales are not instantaneous. The average time that it takes to sell a business can vary greatly depending on the business sector, but a typical time line from listing to closing can be around 9 months to a year.
What this means for you is that you will need to prepare and plan way ahead of time if you would like your business to sell before a certain date or event. It is also important to remember that there is no guarantee that your business will sell by your goal date, but you will greatly improve your chances if you are ready.
A long-term plan for the ultimate sale of your business should technically start the day you open your doors. No one lives forever, and at some point you will need to deal with the end of your relationship as the owner of your business. If you have not been planning for this since day one, it is not too late to start.
Keep your records up to date and in a format that can be analyzed by a potential buyer (A huge box of crumpled receipts will not work!). Make sure all of your financial records, business history, and sales information is easily at hand if needed (If the right buyer walked into your life tomorrow, do you really want to have to tell them that you have no idea where your past three years of tax returns have gone?).
With every successful business transaction, there is a window of opportunity that you will not want to miss. The perfect buyer might be ready to buy your business two weeks from now or 12 months from now. The key to success is to be ready and have a plan in place.
Are you a small business owner who hasn’t given much thought to an exit strategy? Do you have additional question about how to make your business ready for an eventual sale? Leave us a comment or question here, and we will get your questions answered.