Want to Sell your Business? Avoid these 8 Common Mistakes
At one time or another, every business owner thinks of selling their business. The present health crisis has ruled out various conceptions made about financial crisis by business minds. It is one of its kind that has not only inflicted lives of people but affected the business landscape also. According to a report by KPMG, the MSMEs are affected at several levels- with the national lockdown, the production facilities and retail has been hit the big time. MIcro enterprise specifically in the services sector is considerably impacted.
Measurements took by the governments across the globe such as the lockdown and the social distancing, immediately scaled back both production and consumption. In order to stop the spread of the virus, nations have also partially or fully closed their borders, which also hinders the flow of goods, capital, and people. This has significantly reduced the international flow of goods and services and has simultaneously disrupted global supply chains. In the wake of these measures, most countries have already begun to experience a macroeconomic hit caused by the pandemic. Less than three months into the COVID-19 crisis, economists have reached a consensus that the world has been plunged into a global recession.
In short, although COVID-19’s actual economic impact will be difficult to assess until the pandemic is over, each country will be certainly affected differently, depending on its economic and trade structure. Moreover, while much of the impact depends on the spread of the virus and on how governments respond, different countries are currently experiencing different stages of the pandemic.
To address these adverse times, the Government of India has been preparing strategies and action plans not only for business continuity and sectoral revival but also to improve Ease of Doing Business in the country by releasing notifications/amendments/circulars highlighting measures to improve the business environment in India. Below are some of the special measures by the Central government of India, RBI, SEBI, IRDAI, and the sectoral ministries to boost businesses in India. These steps are cheaper cash, loan freeze, regulatory deferrals, etc.
It’s possible that the coronavirus threat will eventually fade, as the Ebola, Zika, and Severe Acute Respiratory Syndrome (SARS) viruses have in recent years. But even if it does, the next devastating, yet-unnamed outbreak is not so much a matter of “if” but “when.” The steps below can help you understand your exposure to COVID-19, and more importantly, position your business to be resilient in the face of this and the next global threat.
For people or business owners who have decided to move forward and sell their business, there are certain things that he/she should keep in mind if they want to have a successful transaction and get the most money for their business.
1. Try to Sell it by Yourself:
People usually are not objective about their business. Even if you have financial skills, there might be a possibility that you’ll overestimate the value of your business. Instead, you are a successful business owner, which is an art in itself. The selling of a business is the combination of both an art and a science, and it is performed by individuals who do this full-time as their profession. You simply won’t get as much value for your business trying to sell it yourself and learn on the job. Attempting to sell your own business will devour your time. You know how to run your business, but this is no time to learn how to be an investment banker or business broker.
2. Being Sensitive about the Business:
The deal or transaction could be killed between you and the buyer if you take the comments made by a buyer personally. Nobody likes to hear they have an ugly baby, and the same thing goes when you are selling your business. It doesn’t matter how hard you may think you are, any type of negative comment about your business will be taken personally by you. The solution is to get an intermediary to soften the blow and translate the buyer’s comments into requests that will not be taken personally.
3. Unable to Arrive at Fair Market Value for your Business:
Being unrealistic about the real value of the business is one of the many reasons why most of the deals sink. You should know that at what price range, businesses like yours are selling in the current market, and never trust anything you read in the trade magazines as the gospel regarding valuations.
4. Unable to Recognize a Qualified Buyer:
Different businesses require different kinds of buyers, and different buyers will pay different amounts for a business. You need to know which buyers are paying the most in today’s market because buyers change with the market.
5. You Probably Don’t Know Where to Look for the Right Buyer:
Finding the right buyer for your business who will pay top bucks isn’t as easy. Even running an ad in a trade magazine or newspaper won’t help you much. Being the business owner, you want to know who really has the money and whether they are serious about this deal or not. Are they cherry pickers or making low-ball offers that don’t meet your expectations? Remember, time is money, and buyers are generally working on your time and your money.
6. Selling a Business is a Procedure, Not an Event:
Selling a business involves a well-structured process that takes a required amount of time. Generally, It’s somewhere between 6 to 12 months from conception to closing. It is a very detailed process that not all sellers are up to accomplishing without guidance from a trained professional who has performed this process many times before.
7. A Right Team to Get the Job Done:
A lawyer who has experience in business transactions and understands the sale of a business to a buyer. An accountant who understands the tax system and is not afraid to give good tax advice, knowing there is a possibility they will lose your account. He/she should be looking out for your best interest. And an experienced intermediary who has working knowledge of the same sector.
8. You Aren’t Committed to Selling:
Selling a business is quite a big task. People don’t realize how much work it is to assemble all of the data that is needed by a buyer to sell a business. Most of the deals usually fall apart because the seller is either not committed to the processor does not have the mental stamina to continue. The solution is to get help from a seasoned intermediary who will coach from the beginning to the end and help you to reap the rewards for all of your many hard years of work.