Reflections on My Journey: Valuable Insights from Selling My Business

Hi there, and happy Friday!

Many entrepreneurs dream of selling their business and relaxing on a sunny beach, right? It sounds amazing, but it’s not that simple. Today, I want to share my experience with selling a business, including all the ups and downs I faced. My goal is to give you valuable insights so you can avoid the pitfalls I encountered.

Whether you’re thinking of selling years from now or already have a contract in place, this is for you. Let’s get started!

### Key Takeaways

#### Step 1: Deciding to Sell
You might decide to sell for various reasons, like wanting to retire, explore other business interests, or take advantage of a good market. This step can take however long it takes you to make that decision.

#### Step 2: Rough Business Valuation
Get a quick business appraisal, usually within 1-2 weeks. This will give you an idea of what your business is worth.

#### Step 3: Letter of Intent (LOI)
An LOI is a non-binding agreement that shows the buyer’s intention to purchase your business, subject to due diligence. It outlines the purchase price, transition arrangements, and due diligence timeline. This step can take 1-12 weeks, depending on how long it takes to find a buyer.

#### Step 4: Due Diligence
This is a thorough examination of your business by the potential buyer. They will review financial records, legal documents, client contracts, etc. This usually takes 45-60 days.

#### Step 5: Negotiating Final Terms
Based on the due diligence, you and the buyer will negotiate the final price and terms of the sale. This also involves finalizing the sales agreement. Typically, this takes 1-2 weeks.

#### Step 6: Buyer Secures Funding
The buyer needs to secure funding, which could come from various sources like cash reserves, bank financing, or investor capital. This step can take 1-90 days.

#### Step 7: Closing the Deal
Once funding is secured and all terms are agreed upon, you’ll sign the final purchase agreement, officially transferring ownership of the business to the buyer. This usually takes about a week.

My business sale went smoothly for various reasons, including having a fair and straightforward buyer, which made the process enjoyable. But remember, your experience might be different. Now, let’s dive into some mistakes I made:

### Mistakes I Made

#### Mistake 1: Not Starting Sooner
If I could go back, I’d start “selling” my business three years earlier. Focus on profitability instead of scaling; you could make significantly more on the sale.

#### Mistake 2: Not Using My Network
I used a broker who took 10% of the final sale. Interestingly, the first interested party was a mentor of mine. Network early and consider a broker only after exhausting your personal connections.

#### Mistake 3: Not Charging Interest on Seller Financing
I had some seller financing but didn’t negotiate interest on the note. Always know your options, including adding interest to seller financing.

#### Mistake 4: Asset Sale vs. Stock Sale
Know the difference between an asset sale and a stock sale. Most small businesses are sold as asset sales, but stock sales can be more favorable to the seller.

#### Mistake 5: Not Being Mentally Prepared
Selling a business is a 6-8 month rollercoaster. Be ready for potential setbacks and changes in the deal.

#### Mistake 6: Not Fully Removing Myself from Day-to-Day Operations
Being almost out of daily operations isn’t enough. Most buyers prefer the founder to be completely out, so aim to be 100% removed before selling.

#### Mistake 7: Losing Focus on the Business
Stay focused on daily operations even while negotiating and meeting with potential buyers. If the deal falls through, you’ll need your business to still be strong.

Selling my business took a lot of effort and taught me many lessons. I might have missed some details, but I hope this helps you in your journey.

Feel free to connect with me on LinkedIn or Twitter if you have any questions. Until next week!