Small businesses are a mainstay of the American economy with 33.2 million small businesses in the U.S., according to the Small Business Administration. And business growth continues. The Census Bureau reported that  5.0 million new businesses were created in 2022. Yet, there are about 10,000 businesses sold each year. It stands to reason to avoid mistakes made when selling to achieve a desired outcome.

Why Do Small Business Owners Decide to Sell 

Small business owners may decide to sell their businesses due to becoming overworked, moving on to retirement, dealing with a partner’s or family member’s severe health problems or death, or experiencing partnership problems. Business owners have cited the problems of inflation and recession, rising interest rates, financial concerns, and hiring challenges. Still, many businesses are successfully sold each year by avoiding mistakes made when selling

How to Sell a Small Business 

Selling a small business is not a “walk in the park.” It may be challenging and will take some time. So, be sure to avoid mistakes made when selling 

Follow these steps to help you achieve a successful sale: 

  • Clearly define your reasons to sell so you can explain them clearly and honestly to prospective buyers. 
  • Carefully plan the timing for your sale and prepare long in advance of your target date. 
  • Clean up your accounting processes and financial records. Make sure that your financials are up to date and complete. Include factors like your intellectual property and all business aspects that make your business unique and valuable. Have your documents prepared by or reviewed by a professional CPA. 
  • Demonstrate operational excellence. Be able to show potential buyers that the business has been well-managed, and its healthy operating conditions can continue after your sale. Also, show the strength of your existing staff. 
  • Get a reliable valuation of your business’s worth. 
  • Engage a reliable professional business broker. 
  • Work with your broker to market your business. 
  • Create a competitive atmosphere so you don’t have to depend on finding one and only one prospective buyer. That will increase the likelihood of obtaining top dollar for your business. 
  • Entertain only serious offers for your business by finding pre-qualified buyers. That is, buyers that already have the funding they need or are pre-approved for their necessary funding. Make sure that they have industry experience and understand their intentions for running the business. 
  • Screen potential buyers to ensure that they are serious buyers and not “competitive sniffers.” Use a non-disclosure agreement (NDA) to protect your business. 
  • Meet face-to-face with prospective buyers so you can thoroughly discuss their questions and the details of the potential deal. Be prepared to answer their questions. 
  • Consider your financing options, if needed, to help buyers make a deal that will be beneficial to you. 
  • Negotiate an agreement, finalize a sales contract, and close the deal. 

Avoid These Common 12 Mistakes Made When Selling Your Business 

After putting your heart and soul into a business, you want to avoid these 12 mistakes made when selling your business that can destroy a fortune or damage your legacy.  

  1. Changing your reasons to sell. 
  2. Not carefully planning the process and not allowing proper preparation time. 
  3. Keeping poor financial records, not organizing your records, and not having records in legal compliance. 
  4. Not actively and accurately managing legal contracts, vendor, and customer contracts. 
  5. Attempting to sell the business when revenues are down or when you are mired in problems. 
  6. Waiting too long to assemble a transition team to assist you. 
  7. Waiting too long to address operational issues, staffing issues, or leadership issues. 
  8. Neglecting the business while you focus on its sale, thus allowing the business to slide. 
  9. Not getting a rigid and accurate business valuation. 
  10. Listing the business too high or too low. 
  11. Hastily hiring the wrong broker to represent you. 
  12. Trying to rush the sale.  

Seek Professional Business Coaching Assistance 

You could try to sell your home service business now. Or, you can take steps to maximize your business’s value before you start looking for a buyer. Contact Blue Diamond Consultants to get effective business coaching that will take your business to the next level in preparation for a profitable sale.  Our coaching services are based on extensive experience through previous success for home service provider businesses.