Top 5 Mistakes to Avoid When Selling a Business

Some business owners wait too long, some wing it without a plan, and some treat negotiations like a game of poker (spoiler: buyers can see right through the bluff). The good news? These mistakes are avoidable. Let’s dive into the biggest pitfalls, how to sidestep them, and what you can do to walk away with the best possible deal.

Mistake #1: Waiting too long to sell

Many business owners delay selling until they feel burned out, are ready to retire, or (yikes!) their revenue starts to decline. Unfortunately, waiting too long can put you in a position where you're selling under pressure - leading to lower offers, fewer interested buyers, and missed opportunities to maximize your business's value.

Why waiting too long can be a problem

1. Declining performance hurts valuation
   • Buyers want businesses with strong, consistent financials. If you wait until your business starts declining, buyers may see it as risky, leading to lower offers and drawn-out negotiations.
   • If your revenue has been steadily dropping for the past year, potential buyers may assume the trend will continue and undervalue your business.
2. Market conditions may shift
   • Economic downturns, industry disruptions, and new competition can make selling harder if you wait too long. The best time to sell is when your business is thriving, not when you’re scrambling to adjust to a changing market.
   • A restaurant in a trendy neighborhood might have high demand today, but if foot traffic declines due to new competition or economic shifts, it could become harder to sell later.
3. Retirement should be a choice, not a crisis
   • Many business owners dream of selling their business to fund their retirement - but few plan for it early enough. If you wait too long, you may find yourself with limited options, a rushed sale, or an undervalued deal that doesn’t provide the financial security you expected.
   • A business owner nearing retirement may find that their company isn't as attractive to buyers because they haven’t built a strong management team to take over operations, reducing the business's perceived stability.
4. Health and personal circumstances can change quickly
   • Life happens. Health issues, family obligations, or unexpected personal challenges can force an owner into a rushed sale - often at a lower price than if they had planned ahead.
   • An owner who suddenly needs to step away due to health concerns may not have the time to negotiate the best deal or find the right buyer, leading to a hasty sale at a discount.

How to avoid this mistake

Instead of waiting for the "perfect" time, successful business owners plan their exit strategy 3 to 5 years in advance. This gives you enough time to:

1. Increase your business’s value
   • Strengthen financial performance, optimize profit margins, and diversify revenue streams to make your business more attractive.
   • A subscription-based revenue model or adding new service lines could make your business more valuable to buyers.
2. Reduce owner dependence
   • Buyers want businesses that don’t rely on the owner for daily operations. Create standard operating procedures (SOPs) and delegate responsibilities to a strong management team.
   • Document key processes and train employees so that operations can continue smoothly without you.
   • If your business heavily depends on you to function, buyers might see it as a risk. To get started, read more about making your business less owner-dependent in this blog post.
3. Clean up financials and operations
   • Ensure your financial records are accurate, tax-compliant, and transparent to speed up due diligence and increase buyer confidence.
   • Work with an accountant to separate personal expenses from business records and create clear financial statements.
4. Understand your business’s true value
   • Get a professional valuation (through SMB!) to see where you stand today and what steps you can take to increase your selling price over time.
   • A valuation might show that improving cash flow or reducing expenses could significantly boost your business’s worth before listing it for sale.

Whether you're planning for retirement, a career change, or just want to move on to your next venture, the best time to start preparing for a sale is before you need to sell. By planning ahead, you can position your business for maximum value, attract serious buyers, and ensure a smooth transition - on your own terms.

Mistake #2: Not having clear financials

When buyers look at your business, one of the first things they’ll ask for is your financial records. If your numbers are messy or incomplete, it can raise red flags, cause delays, or even scare buyers away. But don’t worry - getting your financials in order doesn’t have to be overwhelming.

Where to start

The key is not to aim for perfection but to take small, manageable steps. Here’s how:

1. Start with the Basics – Gather essential financial records like tax returns, profit-and-loss statements, and balance sheets. If you don’t have everything neatly organized yet, that’s okay - just begin with what you have.
2. Track Cash Flow & Expenses – Buyers want to understand how money moves through your business. If you’re not already doing this, simply categorizing expenses and ensuring all income is recorded properly can go a long way.
3. Get Expert Help When Needed – You don’t have to do this alone. The SMB Growth Network connects you with trusted accountants and bookkeepers who specialize in small business financials. Even a quick consultation can give you clarity on what to prioritize.

How clean financials help you sell faster

One small business owner in our network, a gym owner, didn’t have perfect books but kept track of inventory, sales trends, and operating costs. When it came time to sell, they were able to confidently present solid data to buyers, which built trust and helped close the deal faster.

By taking small steps now and tapping into the right resources, you’ll make it easier for buyers to see the potential in your business—and keep the selling process moving smoothly.

Need help getting started? Explore our Growth Network for expert support.

Mistake #3: Overpricing the business

It’s completely natural to feel emotionally attached to your business - you’ve poured your time, energy, and passion into building it. But when it comes time to sell, emotional pricing can lead to overpricing, which often scares off buyers and results in a longer, more frustrating sales process.

How to price your business the right way

The best way to set a realistic, competitive price is to rely on objective data, not gut feelings. SMB.co’s Bestimate tool gives you market insights, comparable sales, and buyer trends to help you understand what similar businesses are actually selling for - not just what owners are listing them at.

Want a specific price? Make sure your business is ready to support it. If you’re aiming for top dollar, that’s great! But buyers will expect financial clarity, strong operational systems, and a business that doesn’t rely too much on the current owner.

Think about it like selling a home

Most people have a general idea of what their home is worth because of real estate comps, online estimators, and market trends. But when it comes to their business? Many owners have no idea. That knowledge gap can lead to either overpricing (and no offers) or underpricing (and leaving money on the table).

That’s where SMB’s upcoming Business Health Assessment comes in. It will give you clear insights into what’s helping - or hurting - your valuation, so you know exactly what steps to take to maximize your business’s worth before listing it for sale.

Mistake #4: Not addressing operational issues

When buyers spot inefficiencies, outdated systems, or unresolved customer complaints, they often walk away. These issues signal extra work after the purchase, which can turn buyers off.

Before listing your business, take a hard look at your operations. Are there bottlenecks or outdated systems? Addressing these can make a big difference.

For instance, a retail store owner was using a manual system to track inventory, which led to frequent stock discrepancies and lost sales. After upgrading to an automated POS system that synced with inventory, the owner cut down on errors, saved time, and provided potential buyers with clear, up-to-date inventory reports making the business more attractive.

Another example: A service business owner struggled with inefficient client onboarding. They created a simple but effective set of Standard Operating Procedures (SOPs) to guide new clients through the process. They also trained their team to ensure consistency. This not only improved client satisfaction but also made the transition easier for buyers, who could see that their team was capable of handling daily tasks smoothly.

Also, resolving customer complaints can boost buyer confidence. A business owner who addressed negative reviews and improved service found buyers much more interested.

Buyers want a business that’s ready to run, not one they need to fix. By addressing inefficiencies, modernizing systems, and resolving customer concerns, you can make your business more appealing and increase its value.

Mistake #5: Failing to prepare for due diligence

Due diligence is a critical step that can make or break your sale. Start by creating a checklist of everything you’ll need: financial records, contracts, employee details, intellectual property documentation, and any information about liabilities. Keeping these documents organized and easily accessible shows buyers that you're serious and helps them feel confident about the transaction.

Need more guidance on how to prepare for due diligence? Check out our detailed blog post on how to handle your first buyer-seller meeting, a key step in the due diligence process. Being thorough and proactive during the due diligence process ensures a smoother experience for both you and the buyer, paving the way for a successful sale.

Let’s avoid these mistakes, together

Selling a business is one of the most significant decisions you’ll make as an owner - it’s your chance to reap the rewards of all your hard work and create new opportunities for the future. But to get the best possible outcome, avoiding these common pitfalls is crucial. Whether it’s timing your sale just right, getting your financials in order, setting a realistic price, streamlining operations, or prepping for due diligence, each step plays a critical role in attracting the right buyers and maximizing your sale price.

Remember, selling a business doesn’t have to be overwhelming. With some planning, the right resources, and a bit of expert guidance, you can navigate this process smoothly and walk away with a deal you’re proud of. And if you’re ever unsure of where to start, know that SMB.co is here to help, every step of the way.

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