The Top 7 Challenges to Selling a Business

When it comes to selling a business, you might hope for the process to be smooth sailing, but unfortunately, there are some common challenges that you may face. Thankfully, knowing about them beforehand can reduce their impact on the sale and help you prepare adequately for them. With that in mind, here are 7 of the most common challenges businesses face when trying to sell.

1. Not knowing what your business is worth

As a business owner, you should never commit to a sale if you don’t have an accurate business valuation. A business valuation calculates the total worth of your business in the current market environment. If you agree to a shot-from-the-hip price, you could sell yourself short quite substantially. In most cases, a fair market value valuation usually excludes strategic buyers when determining its value. That said, it’s often the strategic buyers who would pay a premium price for business with potential. Either way, it would be in your best interest to get an accurate valuation of your business before putting it up for sale.

2. Understanding how to sell your business

Another common challenge business owners face when selling their business is how to approach it. We often find that business owners attempt to find any available buyer rather than take the time to put together the right deal. This exposes these owners to investors who swoop in with an offer that may not be the right fit. Rather, a coordinated, systematic approach and marketing strategy can help you identify and position your business in front of the right buyers, optimising your chances of selling the business to the person who would be the most appropriate fit.

3. What to do after the sale

Ideally, if you sell your business, you should have some idea of what you will do once the business is sold. This is a common challenge for seasoned business owners: figuring out what they will do with their time once they sell. Another problematic aspect is relinquishing control over the business as it sells. Business owners have a keen sense of independence and drive that often makes letting go of control difficult. To make this process easier, it helps to have a plan or project to start once you retire or move to another business.

4. Keeping everything confidential

When selling a business, it’s essential to keep the specifics of the sale confidential. Leaked information can negatively impact sales by allowing a competitor to capitalise on it. Likewise, the relationship between the business, employees, and suppliers can also get damaged if information is leaked before these individuals hear it from the right people.

5. Limited time to sell the business

If you’ve ever watched Shark Tank, one entrepreneur and his son pitched the Sharks for their investment of time, more than their capital, saying that their time is their actual value. Time is a rare commodity for a successful business owner, so naturally, time would be one of the challenges owners face when trying to sell their businesses. You may not have the time to market the business, sit with buyers, negotiate, network, or draw up a sales contract. If this is the case for you, hiring a business broker would be your solution. 

6. Worries about tax

Lastly, the thorn in the side of every business owner: tax! Tax isn’t something to be afraid of necessarily. If your business is taxed, it generally means you’re making a good profit. However, when you sell a business, the tax implications can be significant and hurt your overall sale price in the end. Understanding the tax requirements when you sell and how to reduce your tax liability would help enormously as you sell your business.

Hire a business broker in Melbourne

Another way to overcome challenges or avoid them altogether when selling your business is to hire the right business broker. If you’re looking for a professional broker, here is a helpful page from Lloyd’s brokers in Melbourne. Here you’ll find professional business brokers who have honed their problem-solving and critical thinking skills to the point where they can effectively identify and create a strategy to avoid complications with a business sale.

Final thoughts

One thing that should bring you some reassurance as you process the sale of your business is that other business owners have gone through the same issues above and have come through them successfully. If you are facing some of these challenges, get a business broker to help you navigate them, and by the end, you will have successfully sold your business.

The post The Top 7 Challenges to Selling a Business appeared first on Entrepreneurship Life.