Risks of DIY Business Sales: Valuation, Time, Transactions

While the do-it-yourself (DIY) world is robust and valuable for many walks of life, there are exceptions here as well. One great example: The world of business sales, where it’s technically possible to sell a business without the assistance of a business broker – but this is a process that comes with several major risks and generally isn’t recommended, whether you’re selling a large business or a small one.

At Utah Business Consultants, we’ve assisted numerous clients throughout Utah with selling a business, helping them hit the important crux points in the process and receive optimal value for their company. What are some of the major risks of attempting to sell your business without the assistance of a quality business broker, and how will our brokers help you avoid these concerns? This two-part blog will go over several factors.

risks DIY business saleImproper Valuation

The first, and perhaps largest, risk of moving forward with a business sale without the assistance of an experienced business broker is the potential for improperly valuing your business. There are numerous factors involved in pricing a business accurately, from the state of the market and competing businesses to the number of employees, assets on-hand, profitability and a plethora of others.

Simply put, if you don’t have expertise in this area, you’re likely to miss at least some of these factors. You’ll also likely start at a disadvantage in terms of understanding different buyer types and how deal terms might appeal (or not appeal) to them. You might end up pricing the business way too high and not attracting any buyers; on the flip side, you could price the business too low and cost yourself important money in the process.

Drawbacks in Other Areas

It’s also important to note that selling a business is a detailed, often-intense process – one that requires significant time and attention on specific details. At the same time, it’s vital to keep a business running properly during sale negotiations, as failure to do so may diminish a buyer’s interest.

And if you’re a business owner or manager trying to both manage a sale and perform all your other tasks, this will create major issues. Companies whose owners attempt this often see major decreases in marketing quality, for instance, plus in other areas where the owner is typically involved on a day-to-day basis. Working with a broker, however, leaves you free to focus primarily on your job while letting our team handle the major legwork of the sale.

No Transaction Expertise

If you’ve never sold a business before, you might not realize how complex these arrangements are. Transactions for the sale of a business are incredibly detailed, plus include areas that business brokers are specifically trained to be knowledgeable on. You’re putting yourself at a major disadvantage if you try to negotiate on your own, including certain risks that might even void the sale due to improper or illegal contract details.

For more on the risks of selling your business without a business broker, or to learn about any of our business brokerage services, speak to the staff at Utah Business Consultants today.

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