The 10 Biggest Mistakes of Selling a Business

Selling a business is a totally different ball game from selling real estate according to Bayleys Business Broker, Rodger Howie.

While some business sales include bricks and mortar, others present tangible value from years of hard graft, building intellectual property, trading credentials and brand value from the ground up.

Business owners have strong emotional attachments to their businesses because they have often sacrificed leisure time, relationships and ready money for future rewards.

While passion is crucial to successfully growing a business, it can also have downsides. Business owners need to put emotion aside and be aware of key pitfalls when selling up:

1. Unrealistic business value

Emotional attachment can overinflate understanding of value. It is important to obtain a current market appraisal.

2. Waiting too long before selling

Sell when the business is performing strongly as opposed to a forced sale due to external factors, like ill health.

3. Thinking a business will sell straight away

If necessary, be prepared to play the long game and sit tight in order to get the right buyer.

4. Being indispensable to the business is a mistake

Succession planning involves ensuring that the business can function well without the owner. How long can the business operate without the owner being there?

5. Not seeking professional advice

Take advice from experienced accounting, legal, financial and business advisors.

6. Not preparing the business for sale.

Leverage good professional advice to examine the business objectively, from a buyer’s perspective. Engage a business sales advisor.

7. Not processing all transactions through the business

Profit directly impacts the value of the business so it’s crucial to maximise all proof of profitability.

8. No business plan, KPIs, or up-to-date financials.

A lack of business structure undermines business value. Demonstrating that success was planned for rather than coincidental will pay off.

9. Think ‘results’, not ‘opportunity’.

Business value is based on historical results, not future opportunities.

10. Emotion is an obstacle to a sale.

Some owners think that they can sell a business on their own. We all know the term ‘false economy’. It’s particularly apt here – an experienced business broker brings business and marketing expertise, market knowledge, multiple buyers and ultimately the best price.

About Rodger

Hailing from Gisborne, Rodger is a former business owner with deep knowledge of sales, marketing and business administration. In 1999 Rodger started a waste collection company in central Auckland. Over 16 years he grew the business into a multi-million dollar company with 22 trucks, employing 60 staff. In 2015 Rodger sold the company and moved his young family to Hawke’s Bay. Since joining Bayleys Hawke’s Bay in 2016, Rodger has helped many business owners sell their businesses for the right price.

Recent portfolio of business sales

First Autoworks and RV

River Park Event Centre

Hastings Laminate & Stone

Ash Ridge Wines and vineyards

Mangatera Hotel and Bottle Store

Hawke’s Bay Platform Hire

Autopower Car Parts

Kolachi Eatery

Hertz Hawke’s Bay

Malo Restaurant

Browns Quality Lime