Selling a Small Business: Seven Common Mistakes Entrepreneurs Make and How to Avoid It

Do you want to sell your small business? Or you are already in the process of selling your small business? If any of the criteria above best describes you, then read on as I share with you seven common mistakes you must avoid when selling a small business.

Selling a small business is a process every entrepreneur wants to experience but unfortunately, only few will build a business that will worth selling. There are several reasons why you would want to consider selling your small business either now or in the future but I won't go into the details here. I have already written an in-depth article highlighting why entrepreneurs sell their small businesses.

But in this article, I will be dealing strictly with seven common mistakes you must avoid when selling a small business. If you are still interested in learning this now; then follow me as I share with you below common business mistakes you must avoid when selling a small business.

Selling a Small Business: Seven common mistakes entrepreneurs make and how to avoid it

1. Impatience

Impatience is usually a common mistake most entrepreneurs make when selling a business. They want to exit the business and the want to do it fast. Being impatience can affect your deal negatively because your potential buyers need time to go over the deal and if you add pressure on them to sign the deal; they will smell a rat.

When selling a small business, it's advisable you keep calm and hide your nervousness or impatience. Even if you are under pressure to sell; don't act desperate as this could scare away prospects.

"Patience; this is the greatest business asset. Wait for the right time to make your moves." - J. Paul Getty

2. Indecisiveness

Are you sure you want to sell your small business? How much do you want to sell? Who have you decided to sell to? These are questions you must put to rest before putting up your business for sale. If you don't find the answers to the questions above ahead of time, you are only avoiding a stumbling block that will get back at you in the heat of the process.

One untold fact in the process of selling a business is that there's going to be behind the scene politicking; whether you like it or not. After putting up your small business for sale, there might be a couple of prospects; which will invariably result to a bidding frenzy and behind the scene lobbying.

"The best thing to invest in your business is your time. To schedule, plan and use time effectively, know your turf and know your objectives. Assess the obstacles and opportunities, then devise your strategies." - The Mafia Manager

If the above situation arises, then you must be prepared to take a stand and decide who gets the deal. You must also be clear and strict on your terms and conditions; you must stick to your agreement. No one wants to deal with an indecisive seller; an indecisive buyer is rather preferred. If you have a reputation for changing your stance when under pressure; then let your most trusted business team member oversee the deal.

"Before making an important decision, get as much as you can of the best information available and review it carefully, analyze it and draw up worst case scenarios. Add up the plus or minus factors, discuss it with your team and do what your guts tell you to do." - The Mafia Manager

3. Not doing a personality checkup

"It takes 20 years to build a reputation and only five Minutes to ruin it. If you think about that, you will do things differently." - Warren Buffett

Are you a person of integrity? Do you keep to your words? Do you have a strong positive personal brand? These three questions must be answered before you even put up your small business for sale. In an article I wrote previously, I stressed the need to invest in your own personal branding. I also explained that your personality can be a leverage for you in the world of business.

I have seen entrepreneurs raise billions of dollars in capital simply because they are trustworthy; meaning they have business integrity. I have also seen small businesses sold for millions and even billions of dollars because of the reputation of the entrepreneur behind that business.

So before putting up your small business for sale, make sure you conduct a thorough personality checkup because your buyers will definitely do. Does your personal name reflect a positive or negative image? Do you have friends and associate who are reputable? Can your business partners vouch for you? How easily can you get an endorsement from someone of high reputation?

These are some of the questions that must be answered during your personality checkup. As a piece of advice, if you know you have a bad reputation; don't be the lead dog in the sale of your business. Instead, let your selling team be led by someone of high reputation; it will get you a fair deal.

"The most important thing in your business relationships is your reputation for honesty. If you can genuinely and sincerely fake honesty, you will be a success. Never doubt it." - The Mafia Manager

4. Showing potential buyers the weakness of your business

When negotiating a deal to sell your small business; be strategic. Know your objectives and capitalize on your business strengths. To sell your business successfully and get a fair deal, you must emphasize your business strength or competitive advantage occasionally; not its weaknesses.

Hide your business weaknesses but be prepared to defend it should in case the buyers hits on it. If possible, tactically divert your buyer's attention away from your business weaknesses. There's nothing wrong with this act; it's strictly business.

You have done your calculations so it's left for your buyers to do theirs. If they fail to spot your business weakness, then it's to their own detriment. You just make sure you keep it that way; it's business.

5. Inadequate Legal checkup

Inadequate legal checkup is a common mistake made by most entrepreneurs when selling a business. You must strive to avoid this mistake because it's deadly. One thing with this mistake is that it can earn you a lawsuit, financial losses or loss of certain rights.

To make sure you don't end up committing this blunder, I will advice you hire an external attorney or legal practitioner to go through your legal framework; it will save you in the long run.

6. Shallow paper work or auditing

Before ever listing your business for sale; you must make sure you have thoroughly gone through the paper work. You shouldn't bother with paper work preparation; I think the accounting department should handle that. But you must sit and review this paper works thoroughly with your accountants. You may even go a step by bringing external auditors to pick holes in your paper work.

It is better external auditors pick holes in your financial statements or paper work than your buyers. As a last note, you should try to have some numbers, business ratios and business statistics off hand. This will prove to buyers that you know your business in and out.

"Know your numbers' is a fundamental precept of business." - Bill Gates

7. Letting the cat out of the bag too early

Until the final papers are signed and business assets transferred; don't spill the beans. Not to your friends, not to your employees and not even to your family. Only trusted men, who will add value to sweeten the deal should be made aware; you core business team as well should be involved in the deal.

Don't spill the beans; don't let the cat out of the bag. Don't, don't, don't. The result of revealing the deal before it is concluded might be more than you anticipated. Revealing that your business is on sale may lead to demoralization of your employees because they will be more concern about their welfare than your business.

Spilling the beans may also earn you some unnecessary competition, unsolicited publicity and media misinterpretation. Or worst still, you might end up with several lawsuits dangling on your neck. So once again I repeat, never let the cat out of the bag until the deal is sealed.

As a final note, I believe you will find these points I have made useful. So when preparing your business for sale; be sure to avoid these common mistakes and I will see you at the top.

And just before i drop my pen, if you really want to learn How to Start a Business from scratch; please feel free to visit our blog. In addition, you can also get quality information on How to Become a Millionaire in less than a year.

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Baby Boomer Entrepreneurs, Get Tips From the Core Principles Business Incubators Use to Help Newbies

Baby boomer entrepreneurs can get tips from the core principles business incubators use to help newbie entrepreneurs. The fast growing new group of boomer entrepreneurs is made up of people seeking to retire from their current employment. They look for a semi-retired life as business owners as compared to traditional retirement. Boomers have an extra time pressure that makes learning from trial and error a poor choice for getting their businesses off the ground. Following a proven model can greatly expedite the development of your business and improve your odds of success. Business incubators regularly help new businesses launch. Taking a look at the core principles by which they assist newbie entrepreneurs has the potential to give you a head start.

Not just Baby Boomer Entrepreneurs, but almost everyone has thought about being in business for themselves. Yet only a few people ever go beyond the point of dreaming and actually start their business. Of those few, 95 percent will ultimately see their business close and not realize their dream of success. Unlike younger entrepreneurs, baby boomers do not have the time to learn by trial and error to overcome the risks of startup. Is there a way to reduce that risk?

Clearly, the answer is YES. Risk can be mitigated. It depends upon knowing what the 5% who are successful do  differently from the way the other 95% approach the task of forming a  business. The process used by business incubators may give us the clue to that difference.

What Are Business Incubators?

Business incubators are organizations that offer specific training programs for entrepreneurs to nurture fledgling businesses. Incubators generally involve starting a business in a location, somewhat like an industrial park, that is specifically structured to share resources and develop skills for people seeking to become entrepreneurs.

The National Business Incubation Association (NBIA) says that business incubation programs provide entrepreneurs with a guiding hand to help them turn their ideas into viable businesses. Since the first incubator opened in Batavia, N.Y., 50 years ago, incubation programs around the world have been providing client companies with business support services and resources tailored to young firms to help increase their chances of success.

The US Government Says Business Incubators Improve Odds of Success For New Companies

The U.S. Department of Commerce Economic Development Administration (EDA) validates that incubation works. Their research says that business incubators provide communities with significantly greater results at less cost than do any other type of public works project.

Researchers found that business incubators are the most effective means of creating jobs; more effective than roads and bridges, industrial parks, commercial buildings, and sewer and water projects. In fact, incubators provide up to 20 times more jobs than community infrastructure projects (e.g., water and sewer projects) at a Federal Government cost of $144 to $216 per job compared with $2,920 to $6,872 for the latter.

In another EDA-funded study in the mid1990s, it was found that 87 percent of all firms that had graduated from NBIA member incubation programs remained in business; and about 84 percent remained in the incubator's community.

It is estimated that in 2005 alone, North American incubators assisted more than 27,000 start up companies that provided full-time employment for more than 100,000 workers and generated annual revenues of more than $17 billion. Many thousands more jobs were created by companies that had already graduated from these business incubation programs and now operate self-sufficiently in their communities.

If a strategic focus on innovation and entrepreneurship makes the difference in businesses started in business incubators, a similar focus must certainly work for baby boomer entrepreneurs facing the same problem of starting a business and avoiding the pattern of failure that most businesses experience.

What Are The Core Practices of Business Incubators that Make A Difference For New Entrepreneurs?

The National Business Incubation Association has consistently shown that incubation programs that adhere to the principles and best practices of successful business incubation generally outperform those that do not. They cite two industry principles that effectively characterize business incubation programs around the world, regardless of their focus or mission.

1. The incubator aspires to have a positive impact on its community's economic health by maximizing the success of emerging companies.

2. The incubator itself is a dynamic model of a sustainable, efficient business operation.

The essence is that incubators provide a structure for entrepreneurs to learn to avoid the problems that typically cause failure. Entrepreneurs learn a behavior modification process to use deliberate business development techniques, business operation by design rather than by accident. Incubators normally admit entrepreneurs into a structured learning experience that expands their skills as they move toward a required level of skill and graduation from the incubator once the skills are developed.

What Can New Entrepreneurs, Especially Baby Boomer Entrepreneurs, Learn From Incubators?

Incubators are about expectations and systems. Incubators strive to be good models of a company that uses systems effectively for their own operations. They use systems to design the training experience of companies that enter their programs. Additionally, they teach their member companies to design and operate effective systems. It stands to reason that businesses created on such a systems model have a better chance of survival.

Baby Boomer Entrepreneurs can learn from the success of business incubators and the businesses they help start. If business incubators have systems that include key elements, your business should have key elements too:

- Commit to the core principles

- Obtain consensus on mission

- Structure for financial sustainability

- Build an effective board of directors

- Prioritize management time

- Develop an effective facility

- Integrate activities into the fabric of the community

- Develop stakeholder support

- Maintain a management information system

How Can Your Business Benefit From What We Know About The Success of Incubation?

1. Find out if there is an incubation service near you. Though most of these are resident programs, a number of variations are often directed by local economic development groups that do not require your business to be resident in an incubation facility. The  the National Business Incubation Association cooperates with many local programs and may be able to help you find out if there is an incubator near you.

2. If you can't find an incubator, you may want to try a do it yourself approach. Get the best book written on applying the systems concept to business development. Many incubators use this as a a book in their training of new entrepreneurs,This is Michael Gerber's The E-Myth Revisited: Why Most Businesses Don't Work and What To Do About It. Each year, the owners of the fastest growing privately held companies in America credit this book as being the most important business book they have ever read. Again, many of the formal business incubation programs are based upon the concepts discussed in this book.

3. Look for Internet based information that can help you develop your own business incubation systems at low to no costs. Especially look for ideas that align with your specific needs in your stage of life as a  Boomer. Remember, you are looking to design a plan that allows you to avoid the most common errors that take place when new businesses are formed. Boomers who really want to make a mark do not have the luxury of running their businesses by the seat of their pants.

In summary, the most important point of incubation is to build a business by design. The first step is defining expectations. The second step is building systems to make those expectations happen.

Shallie Bey is a business coach who works with Baby Boomer Entrepreneurs and other small business owners. If you would like to see more of his free resources on entrepreneurship, go to http://www.squidoo.com/Baby-Boomer-Entrepreneurs You can also find his writings on the Smarter Small Business Blog at http://businessrebirth.blogspot.com

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Top 10 Business Plan Myths of Solo Entrepreneurs

Don't let these stop you from having a business plan for success!

A recent study of 29,000 business startups noted that 26,000 of them failed. Of those failures, 67% had no written business plan. Think that's a coincidence?

Here's the top 10 myths Solo Entrepreneurs often have about business plans-usually, the reasons why they don't have one. De-bunk the myths, and see how having a business plan for your solo business, can actually be easy and fun--and can jumpstart your success!

1. Myth: I don't need a business plan--it's just me!

Starting a business without a plan is like taking a trip in a foreign country without a map. You might have a lot of fun along the way, and meet a lot of friends, but you are likely to end up at a very different place than you originally set out for-and you might have to phone home for funds for your return ticket.

Solo Entrepreneur Reality: Successful Solo Entrepreneurs know that the exercise of creating a business plan, really helps them think through all the critical aspects of running a business, make better business decisions, and get to profitability sooner.

2. Myth: I have to buy business plan software before I can start.

Business plan software comes in many shapes and sizes, and prices. Many are more geared at small and growing businesses with employees.

Solo Entrepreneur Reality: Business plan software can be helpful-but it's not required. Software is more likely to help if you have a more traditional type business, like a restaurant or a typical consulting business.

3. Myth: I need to hire a consultant to write my business plan.

Consultants are an expensive way to have your business plan written.

Solo Entrepreneur Reality: Your business IS you-and you need to be intimately involved with the creation of your business plan. A better strategy, if you think you need professional help, is to hire a coach or mentor-someone who can guide you in what you need to do, not do it for you.

4. Myth: The business plan templates I've seen have all these complex-sounding sections to them-I guess I need all those?

The only time you need to follow a specific outline is if you are looking for funding.

Solo Entrepreneur Reality: Your business plan needs to answer ten basic questions-that's it! Don't make things more complicated than necessary.

5. Myth: My business plan needs to be perfect before I can start my business.

If you wait for everything to be perfectly detailed, you may never start.

Solo Entrepreneur Reality: If you have at least a first draft that answers those ten basic questions, you are ready to launch your business! Make your business plan a living, evolving document. In the startup stages, review and update your plan every 2-3 months. As you grow and stabilize, you can slow down the review cycle to every 6-12 months. All business plans should be reviewed and updated at least once a year.

6. Myth: I have to do everything I say I'm going to do in my business plan, or I'm a failure.

Many Solo Entrepreneurs never start because of this myth-which leaves them feeling that the success of their future business suddenly rides on each stroke of the pen or click of the keyboard!

Solo Entrepreneur Reality: Think of your business plan as a roadmap for a trip. Expect to take some detours for road construction. Be flexible enough to take some exciting, unplanned side trips. And don't be surprised if instead of visiting Mount Rushmore, you decide to go to Yellowstone, if that turns out to meet your vacation goals better!

7. Myth: A good business plan has a nice cover, is at least 40 pages long, must be typed and double-spaced...

Business plans intended for investors, such as a bank or venture capitalist, must meet certain requirements that such investors expect.

Solo Entrepreneur Reality: As a Solo Entrepreneur, your business plan need only satisfy YOU. It might be scribbled on a napkin, on stickie notes on your wall, or consist of a collage of pictures and captions. It might be all in one document or scattered among several mediums. As long as you know it in your head and heart without having to look at it, and and it is easily accessible to you when you have doubts, that's all that is necessary.

8. Myth: I don't need a loan-so I don't need a business plan.

YOU are the investor in your business-and would you invest in the stock of some company without seeing a prospectus?

Solo Entrepreneur Reality: Seeing your plan in black and white (or color, if you prefer!), can give a whole new view on the financial viability of your business. If "doing the numbers" seems overwhelming, remember you don't need fancy spreadsheets. Just lay out a budget that shows where all the money is coming from (and going), and have an accountant review it for additional perspective.

9. Myth: My business plan is in my head-that's good enough.

I don't know about you, but I sometimes can't remember what I planned yesterday to do tomorrow, if I don't write it down!

Solo Entrepreneur Reality: There is a real power in writing down your plans. Some schools of thought advocate that the act of writing a plan down triggers our subconscious to start working on how to manifest that plan. And, of course, it's a lot easier to remember when you have it in front of you. And a lot easier to share and get feedback from your non-mind reading supporters.

10. Myth: Friends and family are the best sources of feedback and advice on my business plan.

If your brother is an accountant and your best friend is a market research expert, then this might be true.

Solo Entrepreneur Reality: As well meaning as our friends and family can often be, they just aren't the best way to get honest, objective guidance. Instead, seek out folks that have specific knowledge that will help you, are willing to be candid with you, and that have a genuine interest in helping you succeed. A business coach is one resource to consider!

Copyright 2004, Terri Zwierzynski - Accel Innovation, Inc.

Terri Zwierzynski is a self-employed business strategist and marketing consultant to solo entrepreneurs, and a grassroots promoter of the solo entrepreneur lifestyle. She runs Solo-E.com, the resource website for the self-employed which attracts thousands of solo home business owners monthly from over 100 countries on six continents (and was recently named a finalist for "Website of the Year" in the 4th Annual Stevie® Awards for Women in Business). Terri is also the co-author of 136 Ways To Market Your Small or Solo Business.

Find more articles about Business Planning at Solo-E.com, plus get a copy of our new ebook, "25 Surefire Ways to Capture More Clients, Get More Done in Less Time, and Make More Money -- in 90 Days or Less."

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