6 errors entrepreneurs make when selling a business

The commitment and sacrifice it requires to become a successful entrepreneur is often understated. Whether you define entrepreneurial success as building a comfortable income for your family whilst enjoying flexibility and freedom, building a self-sustaining business that can be passed down, floating your business on the stock exchange, or selling your business for a tidy sum, the process will not be without significant challenges and personal development opportunities. That said, if you do succeed and decide to sell your business, you deserve to get the best price possible for it.

However, the fact of the matter is 80% of companies listed for sale don’t sell, despite the hard work and effort that entrepreneurs put into building them. The reasons why are solvable once you understand why most businesses aren’t sellable, but as ever knowledge is power. So here are the 6 mistakes every entrepreneur needs to avoid in order to sell their business successfully.

1. Believing that because that because your business is profitable it’s also sellable

This is not the case, why? Because you can have a highly profitable business that poses too much of a financial risk for any potential buyer to purchase. For example, all the value may be in the founder through personal relationships with clients and prospects, the founder may be heavily involved in the day to day running of the business to the point that they become a bottleneck. The key is to build a business that can function without you through a strong team, robust systems and processes and a sustainable business model.

2. Not thinking about selling the business early enough‍

It almost seems counterproductive to think about selling a business in the process of starting a business, right? But that’s my advice. Build the business to sell from the very beginning even if that is not the end goal because it will increase the value of your business in every way. That means thinking about your business from a buyer’s perspective at every stage of growth and asking questions like:

• Does this business still have good product market fit or is the opportunity we’re focusing on declining?
  
• Are we focused on the right products and revenue streams, not just the ones I’m personally excited about?
  
• Are we conducting customer and market research to ensure that the business meets customer needs now and in the future?
  

3. Building a business based on purpose and passion instead of market opportunity

Passion and purpose are great, but they are not enough to build a sellable business. Buyers don’t care about your passion and purpose they want to know that when you leave, the business will continue to be profitable. By all means build a business that is fulfilling, but if you want to sell, make sure that your business is built on a growing market opportunity not a declining one.

‍4. Expecting to sell without preparing to sell

Businesses don’t sell by accident; you have to prepare to sell and often that’s not a quick process. Ideally you want to start preparing a business at least 2 years before you want to sell. Our 6P Launch Framework™ provides a structure for preparation.

• Purpose – ensure that your business has good product market fit and your purpose is aligned to a strong market opportunity
  
• Product – refine your product mix and ensure that you are focused on the right products and services with the best revenue opportunity
  
• People – ensure that your leadership team is future focused and not overly fixed on what worked in the past
  
• Promotion – ensure that you have a strong brand and marketing engine that drives consistent leads
  
• Processes – ensure that your business has robust processes in place for every key function
  
• Profit – ensure that your business model is scalable and drives recurring revenue
  

5. Preparing the business to sell without preparing yourself to transition

Being an entrepreneur is as much a personal development journey as it is a business journey. It is impossible to grow a successful business without growing personally. Entrepreneurs often get much of their identity and personal satisfaction from their business, so when it’s gone it may feel like part of you is gone. It’s important to prepare for this transition and to extract yourself emotionally from the business and have a plan for what you want to do when the business is sold.

For example, perhaps you want to move into a different existing business venture. Or, perhaps you want to start something from the ground up again. As long as you have a plan in place, this is what is important. Make sure that you look at any mistakes you may have made previously, and work on improving them in the future. We recommend making a list of things that you would do differently in your future business such as potentially using an online age verification guide to keep your business safe, having non-disclosure agreements, and so much more. Keep your mind occupied, otherwise you may struggle with letting go.

6. Not getting the right advice from the right experts‍

Accepting help when you’re hoping to sell your business is paramount as it will ensure that you don’t miss a single thing or lose out on money during the process. Whether you’re looking to sell a franchise, or even scope out new opportunities and buy into a franchise, there are plenty of experts on hand who can guide you through each stage. Using Franchise Local as your guide will not only provide you with inspiration with regards to your next business venture, but it will also walk you through useful tips so that you can make an informed decision. As an entrepreneurial minded person you will always be on the lookout for the next best opportunity so that you can find something you truly enjoy doing; getting some advice and guidance from experts who have experience in this field is a surefire way to guarantee a positive outcome. It's also worth mentioning another mistake entrepreneurs often make is not considering the best platforms to sell business online. Leveraging online marketplaces can expand your reach to potential buyers and streamline the selling process. Ensuring you present your business attractively and transparently online can make a significant difference in attracting serious buyers and achieving a fair price.

About The Author

Katrina Douglas Founded The Launch Strategist in 2019. She built the business with one main goal in mind: to help CEOs and Directors achieve greater financial success and structure in their business.