Five things not to do when selling your business

It’s easy to pick up bad habits as a business owner. It can also be dangerous—especially when it comes time to sell your business. Fortunately for you, Seattle entrepreneur John Martinka, founder and vice-president of the “Partner” On-Call consultant network, recently wrote an article on “Top 10 things a business owner should not do.”

Here are my five favourite things that Martinka says no business owner—and more importantly, no business seller—should be doing:

Hang on too long. Know when it’s time to get out. Martinka says too many owners coast too long on their laurels, and then when they go to sell they wonder why buyers are skeptical. A sales decline may mean slightly less profit to you, but it could mean disaster to a buyer with debt payments to make.

Have to tell a story. If you have to explain to a potential buyer why your business is better than its financial statements and tax returns indicate, then you have problems that should have been fixed years ago. This also applies to banks or prospective key employees.

Be a lone wolf. Or as I like to say in my presentations, “lone wolves die alone in the dark and the cold.” Nobody wants a business that will effectively dies if the owner sells, quits or gets hit by a bus. Build a management team and prove they know their stuff by taking a month-long vacation.

Not show profits. Both banks and buyers love profits, says Martinka. All the excuses in the world only go so far. If you're running a healthy business, show profits and pay taxes.

Have no written business plan. Companies with a plan have sales and profit growth twice that of companies without a plan, says Martinka. Companies with a plan also have a handy owner’s manual that’s worth its weight in gold to a prospective buyer, or could guide your up and coming executive team and save a fortune in mistakes and miscommunications. Have a plan and update it at least annually.