Eight Common Mistakes Sellers Make   Selling a business is something you either want to do or are forced to do. Naturally, you want to make top dollar from the transaction. The easiest way to do that is to avoid the most common mistakes that all sellers make.   1.Not interviewing enough professional business brokers. A national survey reported most sellers interviewed one agent before listing their business. The next group of sellers interviewed two agents. So the first agent in the door is the most likely one to get the listing of the business. By interviewing only one or two agents, you are only assured of meeting the most aggressive agent, not necessarily the one with the best marketing plan for you and your business needs. Lastly, most sellers called a "real estate agent" thinking it was the same as a "business broker." While licensing requirements may be the same in some states, they are two entirely different careers and disciplines. Trusting one of your most guarded assets to the first person you meet simply isn't the way you grew your business, so why start now?   2. Choosing a professional business broker based on how high he or she is willing to list the price of the business. After showing you a financial business analysis, examining your business, assets, books and records, viewing your competition in the marketplace, your business broker should have a pretty good idea how much and how quickly your business will sell. But many sellers have their own ideas. They want top dollar whether the business warrants it or not. To get the listing, the business broker may sense this and play to your ego. Why? Because the business broker can't lose - even if he or she doesn't sell your business. The broker also knows that after the business doesn't sell, he can come back to you (He'll skip the "See? I told you so!" part) and you will allow a price reduction. Then the business will sell. The problem is that when you are forced to reduce the price, you will likely end up with less than if you had priced it correctly in the first place. Why? One of the things buyers consider when they shop for a business is how long it has been on the market. If it has been too long, they think "overpriced" or now it's time for a "bargain." Odds are you will be offered a significantly lower than what the broker should have priced your business for in the first place.   3. Choosing business brokers who advertise only in the local market Many business brokers are still fighting progress tooth and nail, and they still aren't ready for the Internet or any other kind of national, let alone international marketing campaign. Business sales do occur at the local level, but there are also many free or low cost, effective Internet sites, business magazines, and national classified ads that produce results. If your business broker doesn't have a marketing plan that includes national exposure, he is relying too much on other brokers to sell your business. Who could best buy your business, someone in the community or someone new to the area that is looking for opportunity?   4. Overpricing the business. It is human nature to regard what belongs to us with the eyes of love. Aren't our children more beautiful? Aren't our mates more desirable? Our businesses are no different. Beauty is in the eye of the beholder, and that is why most sellers are tempted to overprice their businesses. A high price is prestigious. It shows everyone how important you are. But too high a price could eliminate buyers. Most buyers are pre-qualified. They know what range to look in. If your business is overpriced, they will compare it to other businesses in the same price range that have more to offer. The result is that they pass right over your business. Many buyers in your price range won't even consider your business because you have eliminated the ones who are willing to buy at the top of their range.   5. Putting too much value on personal improvements and original (dated) equipment cost. Everybody customizes a business when they build, start, buy or takeover. You like neat and orderly books, records and an office with wallpaper, while another is content to pile everything in boxes and just give it to his accountant. You like a spacious open floor plan while another fills every square foot with product for sale. That POS (Point Of Sale) cash register program you put in two years ago for $15,000 is terrific, but the next buyer may view it as a financial drain. The newer version is only $8,500; runs quicker and provides a map and directions to the customers home. To you, it is still worth $15,000. To the buyer it may be only worth $2,000 - 3,000 to say nothing of the repair and maintenance nightmares. What about the manufacturing and assembly equipment installed five years ago? Do they meet the new requirements or is it time for re-tooling? Granted you paid $200,000 five years ago for the equipment and they need $40,000 in re-tooling today, what is the equipment worth? Surely you want the $200,000 and the buyer can spend $40,000 on retooling if he wants to, that's up to him right? Well, the buyer can buy the same "reconditioned equipment" retooled with a warranty for much less. Sometimes 50-60% less. It is best to look upon improvements as something you did to please yourself or enhance the business. Don't expect updates to add value to the business. They may have been required due to local, state or federal code changes, or to increase your bottom line. We won't even discuss how much has been recaptured in depreciation.   6. Mistaking activity for interest When people are interested in a business, they make offers. If they aren't making offers on your business, something is holding them back. Many brokers routinely ask for feedback whenever your business is shown or exposed, but a lot of brokers do not follow through with this courtesy. Feedback is crucial to understanding why you aren't getting offers on the business. The lack of response is usually due to two things - the business is in a state of poor condition and/or it is overpriced.   7. Failing to prepare the business for sale before it goes on the market Preparing the business for sale can include everything from spring cleaning, to repainting, to clearing out clutter, to making repairs, and so on. It's hard work! Many people leave their exteriors and interiors as is, but if you haven't updated in years and the business looks outdated, your business will not compare as well as others who have taken the time and gone to the expense to freshen the appearance of the business. How is your parking lot and exterior sign? This is the first impression a buyer will have. Does it invite them in or tell them to drive by and look at the next business on the list? Once they are in the lobby or main office, what message does this area convey? Remember, the first time they will be thinking like a customer. Don't forget the restrooms. Especially if you are dealing with the public. Are they up to code? Handicap access accessible? What is required if the new buyer wants to expand? Having the answers before the question is asked will keep a buyer interested.   8. Failing to heed the advice of experts When you are represented by a good broker, he or she is trained and has experience in the marketplace. Do not hinder your broker by telling the broker what to do, when to do it and how to do it. Your broker won't be able to help you. But if you are willing to listen and weigh what the broker is telling you, you will know from the forward progress of the transaction that you received sound advice. Business brokerage is the smallest segment of the real estate industry. There are very few professional business brokers in relation to the thousands and thousands of good real estate agents, REALTORS, commercial and industrial real estate agents. Choose a licensed professional willing to back up their work in court if need be.     Bizology - the study of business for sale Bizology.com email to : info [at] bizology [dot] com Chambersburg, PA 17201-1712       BUYING* * FOR SALE * CONTRACTS - FORMS * FINANCIAL * REFERENCE * TAX - LEGAL * BOOKSTORE * * SELLING * | buyer questions | buyers ask | seller finance | business disclosure | seller proceeds | | information list short | business information long | records needed | seller questions | seller non-disclosure | | seller carryback notes. | seller mistakes | partner fraud | business requests | | main index | | you are in SELLING now |