There comes a time in the life of every business owner when you need to move on to something new, retire, or let your business go to someone with new energy and ideas. As a business advisor, I always have qualms about recommending this move, because the process of selling your business can generate more pain and loss than continuing to run it yourself.

Since I’m not an expert in this area, I was pleased to see a new book, “Exit Rich,” by a couple of leading authorities on how to do it right, Michelle Seiler Tucker and Sharon Lechter. They not only focus on the positives, but include some succinct advice on what not to do. Their top items of guidance resonated with what I have seen in my own experience, paraphrased here as follows:

1. Don’t wait until you are burned out or lost interest. Selling your business requires the same energy and passion as growing it. Once you have lost that edge, and potential buyers will sense it quickly, the value of your business will trend down quickly. You should plan an exit strategy, and optimize your activities and timing to get top dollar.

2. Refrain from telling associates that you are selling. It’s amazing to me how people always assume the worst. Especially if people hear rumors of your interest in selling, they will assume that you are fighting bankruptcy, being pushed out, or your personal life has fallen apart. Limit your disclosures only to business brokers, and serious potential buyers.

3. Decide to do it yourself, without professional help. Selling your business is much like starting it, and not something you can do in your spare time. The critical tasks, which require professional skills, include packaging the business, actively marketing it, negotiating terms, and due diligence. Trying to do all this yourself is a recipe for disaster.

4. Depend on a real estate broker vs business broker. Selling a business is not just selling a business property. The buyers are different, the rules and contracts are new, and focused marketing is required. I recommend contracting early with an experienced M&A advisor or business broker, and following their lead, rather than finding a friend.

5. Negotiate based on current month-to-month lease. If your location is key to the value of your business, make sure you have a long-term lease, or at least a guarantee of renewability. What you don’t need is a buyer dealing directly with your landlord to get your key asset, leaving you with no leverage and minimum value for the sale.

6. Price the business based only on your instinct. Selling a business, like any other asset, requires a realistic appraisal of value. Many owners have no appreciation for the value they have built up over the years, while others tend to always have an inflated view of their worth. Neither perspective is good for credibility or a fair result from your sale.

7. Disclose proprietary information to incent interest. I have found that entrepreneurs often don’t appreciate the need for intellectual property or their “secret sauce” when looking for an investor, and are quick to give away the details when selling the business. Not getting a signed non-disclosure before negotiating can cost you dearly in value.

8. Sign with a buyer without proper due diligence. Just like potential buyers will do the due diligence on you, you should be as thorough in checking their credentials, intent, and history. Don’t risk your business, your personal legacy, and your time on unqualified buyers and scams. This task is a key one for your professional business broker.

9. Grab the first buyer’s offer without a plan B. The evidence I see indicates that less than forty percent of business sales come to fruition the first time around. Create a sense of urgency by setting up back-to-back buyer meetings, and letting potential buyers see each other. Always be ready to talk about future growth plans, as an alternative to a sale.

10. Assume that selling to an employee is quick and easy. Here the evidence is strong that sales to employees don’t work out well. Most employees have a limited perspective on the role and financial requirements to be an owner. In addition, normal negotiations may cause employees to become emotional and leave the business or work against you.

I always remind business owners that their business is likely their most prized possession, and the sale is one of the biggest decisions in their life. It’s a very complex process, as well as an emotional one. From your own experience, you know that complex decisions should never be made on emotion. Get good professional help here, and enjoy the legacy you deserve.

Marty Zwilling

*** First published on Inc.com on 02/25/2021 ***