Individuals who spend many years owning and running a business may wish to eventually retire or invest in another venture. However, when the time comes to sell their business, familiar habits or actions may interfere with the sale or cause issues that result in a loss of profits.
CNBC reports that business owners have nearly 90% of their wealth and assets connected to their companies. The transfer of a business from one set of hands to another may occur with fewer problems when the seller avoids a few common errors.
1. Leading with emotion
Some individuals do not expect the emotional impact that can occur with selling a business, especially when they created the company and built it from the ground up. These business owners may find themselves turning down reasonable and profit-making offers because they feel apprehensive and begin to second-guess the decisions they make regarding the sale.
2. Foregoing annual business evaluations
Business owners who plan to sell their company within a few years often find themselves unprepared or surprised regarding its value or how they might exit the business. Failing to review a company’s general status at least once a year or remaining lax about planning for a variety of possible scenarios can lead to a loss in profit during the sale of a business, especially when sellers find themselves in financial trouble and need to make the best of assets connected to the sale.
3. Misreading the commercial real estate market
Business owners planning to sell their companies may not realize how the commercial real estate market and its trends can affect a buyer’s willingness to meet a current price. Remaining aware of market fluctuations can help sellers set prices that match those conditions.
Careful planning and avoiding insular attitudes that do not allow a business to flourish if sold can prevent financial gaffes for both commercial buyers and sellers.