5 Common Seller Mistakes and How to Avoid Them

When it comes to selling a business, there are several common mistakes that sellers often make. These pitfalls can be easily avoided with the right preparation, planning, and advice. At Intelligent, we guide our clients through the sales process, helping them to make informed decisions every step of the way. Let’s take a closer look at five of the most common seller mistakes and how you can avoid them.

1. Confusing an Exit Date with an Exit Strategy

One of the most common mistakes we see is sellers confusing an exit date with an exit strategy. It’s easy to say, "I want to be out of my business in two or three years." However, if you want to sell by a certain date, you need to start preparing now. Selling a business can take anywhere from 6 to 18 months. On top of that, there might be a handover period that could last up to a year. This means that if you want to be out of your business in three years, you should start planning now.

Don’t confuse a fixed date with a strategy. A date is a set day on the calendar, while a strategy is a plan to achieve that goal. To ensure you exit on time, it’s crucial to understand the steps involved and start planning early, including assessing your business’s valuation and making any necessary improvements.

2. Failing to Keep Your Financials in Order

Selling a business is a financial transaction, and your financial performance plays a significant role in determining the value of your business. That means your books need to be in order before you even think about selling. This might sound basic, but many small businesses neglect their finances, allowing them to fall behind.

If your financial records are not up to date, or if you don’t prepare management accounts, you could find yourself scrambling to provide vital information when it matters most. Buyers will often want to see your financial performance for the last quarter or month. If you haven’t prepared these reports before, you might struggle to meet these expectations, which could hurt the sale process.

At Intelligent, we can help you ensure your books are in order and advise you on how to organize your financial records in a way that’s appealing to potential buyers.

3. Not Understanding the Sales Process

The sales process can feel overwhelming, especially when buyers request information that might seem inconvenient or excessive. But it’s important to understand that buyers are investing a significant amount of money in your business, so they need to know exactly what they’re getting.

If you’ve prepared your business properly, having the right information available will make the process easier and less frustrating. Your broker can help you navigate the steps, explain what information buyers are likely to ask for, and ensure you’re fully prepared for the transaction.

At Intelligent, we work with our clients to guide them through the sales process, helping them stay organized and focused so the sale goes smoothly.

4. Losing Focus After Accepting an Offer

It’s easy to get excited once you accept an offer for your business. But keep in mind that the deal isn’t done yet. Until the sale is finalized and the money changes hands, there’s still work to be done.

Many sellers make the mistake of mentally checking out once they’ve accepted an offer, thinking they can start planning their next steps. However, the focus is still needed on the business during this time. If the process stalls or your attention shifts away from your business, it can lead to complications.

At Intelligent, we ensure that you stay focused and motivated throughout the entire process, providing support and advice when needed to keep things on track.

5. Overvaluing Your Business

One of the biggest mistakes sellers make is overvaluing their business. While it’s natural to think your business is worth more than it might actually be, it's important to approach valuation realistically.

Many business sales involve buyers using borrowed funds, which means they and their lenders will be cautious. Overvaluing your business can scare off potential buyers and complicate the financing process. For example, if your business makes £100,000 annually and you want £1 million for it, it could take a buyer 10 years to recoup their investment, which is highly unlikely.

To avoid overpricing your business, it’s crucial to have a clear and realistic understanding of your valuation. At Intelligent, we help you assess your business’s worth and provide examples of similar sales that can guide your expectations. Our team works with you to ensure you’re making an informed decision about your valuation, so you can sell your business at the right price.

Conclusion

Selling a business is a big decision and requires careful preparation. By avoiding these common mistakes, you can make the process smoother and more successful. Whether you’re considering an exit strategy, getting your financials in order, or understanding the sales process, Intelligent is here to guide you every step of the way.

If you’re ready to start the process or want to learn more about selling your business, get in touch with us today. We’re here to help!