It probably goes without saying that selling a business can be an emotional experience. Very few owners can completely distance themselves from their business . . . after all, this is their baby. Unfortunately, this sometimes leads to irrational decisions that can hinder or block the successful sale of the business.
There are three common pitfalls that I see regularly when working with sellers, each of them damaging in their own way:
- Overpricing the business based on perceived or emotional value. Most business owners have invested a lot of time, money, and sweat equity into their business. They sometimes have visions of what the business was, or what it could be in the future, neither of which really have any bearing on the price. That fact is that buyers will pay for a business what it’s worth now. Try to take emotion out of the pricing decision in order to determine a realistic market price.
- Projecting emotions on the buyer. This one is interesting. Sometimes sellers are so emotionally attached to the business that they take offense to “lowball” offers, or very probing questions from the buyer. Most buyers are simply trying to understand the inner workings of the business and get a good value. Don’t make assumptions about what’s in the buyer’s head. Remember, this is a business transaction – it’s not personal.
- High anxiety during the closing process. It is the rare transaction that does not have some sort of hiccup during the closing process. Whether it’s a forgotten lien on your real estate, or some technicality with the buyer’s loan, some problem is bound to arise. The levels of stress and anxieties on both sides of the deal are directly proportionate to the number of days left until closing! I’ve worked with buyers and sellers who are ready to pull the plug due to some unforeseen issue and have had to “talk them off the ledge”. Most issues can be resolved given a little time and expertise. Have faith in the process.
By being aware of these pitfalls in advance, you can hopefully prepare for the emotional roller coaster of selling a business. Here at Murphy Business & Financial, we can help guide you through the process and calm some of those choppy waters!