Debunking Common Myths About Selling a Business

Entrepreneurship is filled with challenges, celebrations and collaborations. It is an all consuming role that makes the owner eat, sleep and drink the business strategy and marketing plan. Most business owners give their best until it is time to move to another interesting endeavour or retire from their duties to enjoy life. They usually plan for their exit in advance to ensure the business sale is a smooth process, and the leadership transition doesn’t create a disruption in the organisation.

Although they are prepared for this period, they may become paranoid about the upcoming negotiations, screenings and background checks because of the myths in the marketplace. Creating a team for assistance in the research work and providing guidance in legal matters is vital. Here are the common myths about selling a business debunked to help entrepreneurs avoid making mistakes and generate a significant ROI.

1. Myth: A Business Can Be Sold At Any Time

Fact: It is incorrect because selling a business is a planned activity that requires three to five years of preparation. The seller cannot sell it on any given day because they have to ensure that the business is ready for the transition and that the workforce is aware of the upcoming change. Exit planning must begin several years before the time of selling the business. It involves cutting unnecessary costs and boosting cash flow to make the entity highly attractive to potential buyers. Entrepreneurs must start delegating all their responsibilities to seniors to ensure the business operates effectively without their presence.

2. Myth: Pricing Depends on Market Trends

Fact: It is a myth that businesses are priced according to market trends. Entrepreneurs may get an idea from recent transactions of similar entities. However, they set pricing through careful and systematic business valuation performed by a professional accountant. They use valuation methods like market capitalisation, discounted cash flow, liquidation value, book value, and times revenue. These methods help them set the right price when they initiate sale businesses online to get the best returns.

3. Myth: Selling a Business Does not Need Marketing

Fact: It is a myth that a business will find takers without marketing because of its goodwill in the marketplace. It is unlikely to find serious and qualified buyers within social circles. Most of the contacts in the network may not even pay the right price because they already have several investments or businesses operating in the same sector. Thus, it is vital to create business listings and post them online to reach a wide range of business buyers. These people are looking for high performing businesses and can offer a better quote. It allows the seller to choose from a range of offers and generate the best ROI.

4. Myth: Do Not Keep the Sale Confidential

Fact: Announcing the sale of business online at the onset can be damaging. The seller must withhold the name while advertising the business to attract buyers. They must make the potential buyers sign the non-disclosure agreement before sharing confidential information. These steps are necessary to avoid the feeling of uncertainty among the workers, customers and suppliers. The outgoing owner must inform them about the sale and leadership change when they are close to short listing qualified buyers for negotiations.

5. Myth: A Struggling Business Cannot Be Sold

Fact: Although it can be challenging to find buyers for a low performing business, it can find takers if marketed honestly. Some buyers are looking for affordable entities that can be developed with a new vision, funding and leadership. It can take some time, but it is not impossible to sell these businesses. Also, the seller can utilise the time to improve sales through discounts, referrals, enhanced customer relations and automation. They must portray the right image of the entity and showcase its strengths to help buyers understand its value and potential.

6. Myth: Sell the Business Only When You Retire

Fact: Retirement should not be the reason behind choosing the sale of business online. An entity can be sold when you feel the time is right to pass on the baton to a competent individual. Entrepreneurs are closely attached to their ventures and may want to continue to lead them until their health allows. However, this is not the right approach because their strategies and policies can become outdated after some time. It is better to exit when you have contributed significantly and are feeling saturated. Age and retirement should not be involved in the decision to sell.

7. Myth: Grab the Highest Offer Quickly

Fact: Many sellers believe this myth and get taken for a ride by deceiving individuals. They take advantage of completing an urgent sale and make the seller agree to unfavourable terms like deferred payments or performance based valuation. The seller becomes helpless in this situation and may not even get the actual worth of the business in return. Thus, it is vital to weigh the pros and cons of every offer and screen several buyers to choose the best quote. Do not be in a hurry to close the deal, and make your lawyer evaluate the terms of the agreement before signing any contracts.

Wrapping Up

Planning the sale of your business online becomes easy when you do not pay attention to rumours and myths. In addition, it is essential to market the business effectively and screen the potential buyers carefully to find the right individual with the desired offer.