You’ve built a business from scratch, made it profitable and overcome a million and one obstacles along the way.

With the hard stuff done and the company in good health, your focus might naturally begin to turn to the last big decision you’ll make as an entrepreneur: when to sell and reap the rewards of your labour.

But, after putting so much into a company for so long, pulling this lever can be difficult.

Unfortunately, the process itself is often complicated and riven with potential pitfalls. But, with some careful planning and a little knowledge, you can ensure you get the exit you deserve after years of building.

Here are some of the most common mistakes to avoid, if you’re looking ahead to life beyond the business.

Mistake #1: Waiting too long to assemble your team of expert advisers

There’s no golden rule when it comes to timing the assembly of your advisory team, but “sooner rather than later” is a helpful mantra.

Giving yourself the time to think about who you need, and where your blind spots are will ensure you remain in control throughout.

Some key questions never change when tackling this crucial stage of the process: have the individuals you’re considering done this before? Have they worked in the same sector as your business, and do they have the knowledge and expertise to navigate challenges that are particular to your industry?

Above all, take the time to properly vet the people you plan to work with and make sure you’re comfortable with their approach. This is likely to be one of the biggest moments of your life as an entrepreneur, so it’s worth ensuring you fully trust the people you’re hiring to guide you and are confident in your ability to work together as you progress into the sale.

Mistake #2: Thinking your business is worth X, when it’s worth Y

Approaching a sale might be the first time you’ve seen an outsider put a hard value on your business, and seeing a figure in black and white likely marks a significant milestone in your journey.

It’s important, though, not to get blinded (or blindsided) by the figure itself too quickly.

The first thing to do is to build a comprehensive strategy for each of the key areas of the business during and after the sale. This will help potential buyers see how the firm will continue to grow and build value after you’re gone.

Getting to the bottom of things can be difficult, so lean on your advisory team to help you get a sense of how other, similar firms, are valued in the market, and seek an expert third party valuation.

Numbers often change. A valuation can depend on the firm that is assessing it, how they’re measuring the component parts and what the current market climate is. Crucially, too, the figure you receive initially may not be what you receive on transaction, but being prepared in good time will enable you to get as close as possible to your firm’s true value, and what you should be ready to accept – or not – as you continue in the process.  

Mistake #3: Not knowing your number

This is the figure that’s personal to you.

Aside from the valuation of the business, you also need to be clear about what you stand to gain personally from any eventual sale, and whether it gives you the scope to achieve your next big adventure.

This is an ideal moment to reflect on life after the business, and many entrepreneurs run the risk of feeling adrift if they leave their plans until after they have already exited.

Consider what it is you want to do, what it will likely cost to put in place, and don’t forget to consider important factors around the edges such as tax, the effects of inflation, family circumstances and safeguarding your future finances. Expert financial planners will be extremely useful here and can show you well in advance what you can achieve by being prepared ahead of time.

By doing this, you’ll know for sure what your minimum guidelines will be for a sale, and guarantee your hard-earned capital sustains you long into the future.

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Mistake #4: Being your business’ Most Valuable Person

This is your company, and you built it from scratch. So, obviously you’re the firm’s most important person, right?

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As surprising as it sounds, this can be a founder’s undoing when the time comes to say goodbye.

However instrumental you’ve been in the building, running and growth of your business, an eagle-eyed buyer will want to see that the firm and its component parts have long since taken on a trajectory of their own.

No doubt the business already works effectively, and your team has been driving forward bigger and better objectives for success. But, like your personal financial plan, this is an opportunity to map out the “who, what and how” of the company’s long-term future when you’re no longer around to oversee the details.

Ensuring the very best leadership team are in place now (if they aren’t already) will give buyers a meaningful indication that you’ve got a long-term plan, and this will therefore work in your favour when it comes to securing a top-tier valuation.

It is also an opportunity for you to start the often-difficult process of emotionally detaching yourself from the company you’ve worked so hard to create.  

Mistake #5: Trying to time things perfectly

Everyone wants to maximise the perfect sale price – but waiting for that “perfect” moment might mean you stay waiting forever.

It’s impossible to perfectly time any market, and the same goes for timing your sale. There will be a whole host of reasons why a particular moment will be more or less optimal to achieving your aims, but this is a chance to take stock and ask yourself what you most want to achieve.

Is there a baseline figure that you’re after? Do you have the team in place to help you? What might you be able to realise in a year’s time that you wouldn’t be able to realise now? These might be more useful questions to tackle than trying to pin down that elusive perfect moment.

How can Cadro help?

These simple steps are far from an exhaustive list, and there are likely to be many challenges along the way as you approach the sale of a business.

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Cadro is here to help. We know the importance of creating a financial plan well in advance of any potential wealth-creation event, and how to make a detailed map of the steps you need to take for the sale of your business.

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If you are starting to think about life after an exit and want to hear what Cadro can do to help you on your path, get in touch with our client adviser team to find out more.