1. Do not put a for sale sign in the window or on the property. Selling a business is much different than selling a home. You cannot broadcast to the world that your business is on the market. Discretion and confidentiality are critical.
2. Do not stop doing the things that must be done on a daily, weekly or monthly basis. You need to operate your business as if it will never sell. If you let down in any area and sales and/or profits start to suffer, you will regret it forever.
3. Don’t build up inventory in advance of a sale. In fact, you should work it down to the minimum level necessary to operate the business. You should do this for several reasons. You want your inventory to be fresh and current or else it will be discounted at closing. It will take less time to take a physical inventory prior to closing. A buyer doesn’t want to tie up their working capital in unnecessary materials or products.
4. Don’t let your accounts payables get into arrears. Not only will you damage your vendor relationships, but you will unduly alarm the buyer. He/she may wonder if you are undercapitalized or operating inefficiently.
5. Don’t let your accounts receivable go uncollected. Not only will this create cash flow problems, but the buyer may be lead to believe that your clients are not financially stable.
6. Don’t use withholding taxes for working capital. Not only is it illegal, but you will be severely penalized with interest, penalties and a possible jail sentence.
7. Don’t keep your business looking like a slum. If a buyer sees a physical building or leased premises that is not properly maintained, they may think that is how the business is operated. If the business needs to be painted, hire a painter. If the business needs a good cleaning, bring in a cleaning crew.
8. Don’t listen to your friends and business acquaintances when they say why are you selling, why don’t you just hire a manager, why are you giving up making so much money, etc. Quite frankly, it’s none of their business why you are selling. You do not owe them an explanation.
Author’s note. After helping sellers and buyers for more than 20 years, I have found that honesty, integrity, full disclosure, patience and a willingness to consider various alternatives makes the probability of success for all parties very high.
Loren Marc Schmerler, CPC, APC is the former business advice columnist for Sam's Club. He has been a business broker since 1986 and works with business owners and business buyers in every state of the country. If you need assistance selling or buying a business anywhere in the United States, you can reach Loren at 404-550-1417, 24/7/365.
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