11 mistakes to avoid when selling a business

Making mistakes when selling a business can cost you thousands, and in some cases, even jeopardise the entire deal if you don’t address key issues early on. Whether it’s poor timing or inadequate financial preparation, even small missteps can create stalling points, slowing the process and impacting the final sale price.

So, what common mistakes should you be aware of? Here’s our guide to what not to do when selling a business and some practical tips to help you get it right.  

Common business sale mistakes to avoid

1. Rushing the sale

One of the most common mistakes people make when selling a business is trying to move the process along too quickly. Once you’ve decided to sell, it’s natural to start looking ahead to what comes next. But rushing can be costly. Failing to prepare the business properly, market it comprehensively and thoroughly vet potential buyers often results in a lower sale price or even a failed transaction.

Our tip: There are situations where a quick sale can be beneficial, and in those cases, it may be necessary to price the business accordingly. However, most sellers will achieve a better outcome by allowing six to twelve months for the process. That gives you the time to maximise the value of the business, attract the right buyers and negotiate a good deal.

2. Selling off-market 

Some business owners aren’t actively looking to sell, but receive an unexpected approach from an interested buyer. While this can be flattering and is often worth exploring, relying on a single, unsolicited offer is usually a mistake. 

Without marketing the business more broadly, you have no way of knowing whether the offer is competitive. Even a proposal that appears attractive at first may be structured in a way that’s less favourable than it seems, and you may miss out on stronger interest or better terms from other potential buyers.

Our tip: Even if you receive an offer that appears attractive, it’s important to obtain a professional valuation from a business transfer agent. They will consider key factors such as revenue, growth potential, your order book, assets and current market conditions to provide an objective assessment of your business’s value. They can also market the business to create a competitive element that can drive up the price. 

3. Taking your foot off the pedal

Another common business sale mistake to avoid is losing focus during the sales process. It might sound counterintuitive, but when you decide to sell your business, you should work harder than ever to get it in the best possible financial and operational shape. Staying fully engaged and treating the sale like another project within your business will help to maximise its sale price.

Our tip: Focus on performance, cash flow and customer satisfaction right up until the deal closes. The stronger your business is in these final months, the more confident a buyer will be and the less justification they’ll have to ask for price reductions. 

4. Not doing your due diligence

Most people think of due diligence as a process prospective buyers need to carry out. However, as the seller, you must conduct your own checks as early in the transaction as possible. That will help you avoid wasting time on unqualified or unsuitable buyers.

Our tip: Working with a business transfer agent helps you identify serious and capable buyers. They will pre-qualify interested parties, check their financial capacity and ensure strategic alignment before the deal progresses too far.

5. Failing to prepare the business properly

When you’ve invested years of hard work, dedication and sleepless nights into building a business, always make sure it’s the best version of itself when you put it up for sale. Failing to put that preparatory work in can affect both the speed of the sale and the price you achieve.

Our tip: There are several steps you can take to prepare a business for sale, including:

• Giving the premises a fresh coat of paint
• Tidying and decluttering internal and external areas
• Fixing any equipment or outstanding maintenance issues
• Reviewing and updating supplier and client contracts
• Strengthening key customer relationships
• Ensuring financial records and accounts are accurate and up to date

If your business is heavily reliant on your own skills and experience, taking the time to professionalise its operations with systems and repeatable processes can also make it an easier sell.

6. Having inadequate financial documentation 

Buying an established business is a significant investment, with the price of businesses for sale commonly reaching £1 million or more. Given the scale of the investment, prospective buyers will want to know precisely what they’re paying for. As a minimum, they will expect to see:

• Three years of tax returns
• Cash flow forecasts, profit and loss accounts and balance sheets
• Bank statements
• Details of outstanding loans, leases and other liabilities
• Aged debtors and creditor reports
• Inventory and asset lists 
• Copies of any contracts or agreements with financial implications  
• Up-to-date management accounts

Our tip: Taking the time to organise and maintain these financial statements shows good business housekeeping and builds your credibility among buyers. Allowing buyers to view these documents securely early on in the process streamlines due diligence, reduces uncertainty and gives serious buyers the confidence to move forward more quickly.

7. Overvaluing the business 

Another perhaps obvious example of what not to do when selling a business is to overestimate its value. The owner’s emotional attachment to the business can lead to inflated valuations, often based on the personal sacrifices they have made or its unfulfilled potential. 

In our experience, the result of an overvaluation is slower interest from buyers, a longer time on the market, and in many cases, a lower final sale price than if the business had been priced realistically from the start. 

Our tip: Setting an appropriate, evidence-based valuation helps attract serious buyers early, builds credibility and ultimately leads to a smoother and more successful sale. A business transfer agent will provide a valuation based on objective factors, such as profitability, cash flow and the value of its assets. They will also benchmark it against other businesses that have recently sold in the area. That gives you a fair, market-tested valuation you can rely on when negotiating with buyers.

8. Saying too much, too soon

Even if you have an interested and qualified buyer, telling people about your plans to sell the business too early in the process can cause panic among customers, suppliers and employees. That can disrupt operations, damage relationships and even lead a buyer to lower their offer or walk away entirely.

Our tip: It’s advisable to reduce disclosure to a minimum and only inform suppliers, employees and other stakeholders when it’s absolutely necessary. Clear, controlled communication at the right time helps to protect business stability and ensures the sale progresses on your terms. 

9. Making emotional decisions

Selling a business is often a highly emotional process because owners are so deeply invested in it financially, professionally and personally. However, these strong emotions can easily cloud your judgment and affect your decision making. 

For example, if you’re selling a business due to divorce, you may feel pressured to accept the first offer that comes your way. On the other hand, you could be so emotionally attached to a business that every reasonable offer is never good enough. 

Our tip: You should approach every financial decision with a clear and rational mindset, but especially one as important as this. Seeking professional advice can help you stay objective, evaluate offers fairly and achieve the best possible outcome.

10. Not thinking about timing

Timing is critical when selling any valuable asset, whether it be a business or property. Selling during a downturn in your industry or the broader economy can result in lower offers and reduced interest. Too often, sellers focus solely on their personal circumstances and overlook market conditions that can significantly impact the value of their hard work.

Our tip: Keep a close eye on industry trends, market conditions and your own business cycle, and always aim to sell during periods of growth. Even minor improvements in your business’s profitability and order book can lead to significant increases in the sale price.

11. Thinking only about price

Another common mistake when selling a business is focusing solely on the sale price while overlooking other important parts of the deal. When negotiating with a buyer, consider the full transaction structure, including payment terms, warranties, contingencies, handover expectations and your post-sale involvement. These elements can be just as influential on the overall success of the deal as the headline figure.

Our tip: Think about everything you want to achieve with the sale and prepare a negotiation plan that goes beyond price. Hiring a business transfer agent can be beneficial, as their negotiation experience, market knowledge and objectivity can ensure you don’t compromise on critical terms while still obtaining a fair price. 

Planning a successful exit from your business

Avoid these common and potentially costly mistakes when selling a business with the help of Eddisons Business Sales. Our business transfer agents provide full support from preparation to completion. That includes everything from professional valuations and extensive marketing to negotiation support and advice, to ensure a smooth and profitable sale. 

Find out more about our sales process and get in touch for a free and confidential consultation.