Avoid These Common Pitfalls When Selling Your Business

Insights from Financial Advisor Thomas Braun

For any business owner, selling a business is one of the most significant transitions they’ll face. This journey is not just about closing a financial chapter; it’s a massive personal and professional shift. Seth Getz from NuVescor and Tom Braun from StreamSong Advisors recently sat down for an eye-opening conversation about the ins and outs of this transition. Their chat was packed with genuine insights, a few laughs, and some real talk on what it takes to make a smooth exit.

Here’s what every business owner should know before selling their “baby.”

Pitfall #1: Underestimating the Emotional Impact

A business is often more than just a source of income for an owner—it’s a part of their identity. This connection can make the process of selling an emotional rollercoaster. As Seth put it, “It’s not just a number thing; it’s an emotional thing for them.” This isn’t surprising, especially considering many business owners have poured years, even decades, into building something from scratch.

Tom shared how he approaches these high-stakes conversations with clients, balancing empathy with clarity: “You can never tell a parent that their baby is ugly; it never works.”

It’s crucial to acknowledge the owner’s deep connection to their business while helping them come to terms with what the market may dictate in terms of value.

Pitfall #2: Inflated Expectations on Valuation

One of the most common challenges in the selling process is the valuation. Owners often see their business as worth more than the market does, which can create friction when setting a price. Tom explained, “It’s like the valuation of your home. You think it’s worth a lot more than it is.” For many owners, the valuation feels like a judgment of their success, but it’s really just a number.

To navigate this, Tom emphasizes the importance of building a trusting relationship and being “the voice of reason.”

Setting realistic expectations isn’t about undercutting the owner’s efforts; it’s about giving them the best shot at a successful sale.

Pitfall #3: Not Planning Your Stakeholder Communication Strategy

For business owners, one misstep in communicating their intentions can lead to a ripple effect. Sharing news of a sale with the wrong person too early—or without a plan—can lead to unnecessary stress and even lost revenue. “You have competitors that are there, and I call it blood in the water,” Tom warned, explaining that when news of a transition leaks, it can impact valuations and client confidence.

Seth agreed, highlighting the need for strategy and caution: “Working in these things, we have, of course, learned how to be extremely careful about any word getting out because of just how many things can go wrong in that process.”

Their advice is clear: have a concrete communication plan for stakeholders, including employees, family members, and even clients, and be ready to handle reactions strategically.

Pitfall #4: Trying to Go It Alone (Instead Build a Strong Advisory Team)

Selling a business is not a one-person job. According to both Seth and Tom, it’s essential to have the right team in place. Tom’s approach focuses on selecting advisors who genuinely understand the journey of a business owner. “You have to trust them, or it doesn’t work,” Seth said, stressing that this trust isn’t just a “nice-to-have”—it’s crucial to a successful exit.

Having the right people on board, from financial advisors to legal experts, allows the owner to focus on maintaining their business performance while the sale progresses. Tom adds, “Sometimes it’s not having the conversations with your management team until you’re ready to have those conversations.”

Bringing on a trusted team and timing communications wisely are two sides of the same coin, ensuring smoother transitions and minimal disruption to business operations.

Pitfall #5: Thinking Life Will the Same After the Sale

One of the hardest parts of selling a business, as Tom describes, is preparing for what comes next. For many owners, this sale is a once-in-a-lifetime transition, often as momentous as “getting married or having a kid,” as Seth put it. The business isn’t just an asset; it’s been a lifestyle.“Business owners are used to being able to ‘physically manipulate’ the business,” Tom explains, referring to the level of control owners are accustomed to.

After a sale, the owner’s involvement is no longer hands-on, which can feel both freeing and disorienting. Tom shares a strategy that his team uses to help owners stay grounded post-sale:

“Sometimes we’ll automate the investment so that it kicks off the cash flow back to the business owner so that it feels more like what they’re used to.”

This tactic offers some financial stability and helps former owners ease into their new reality, especially if they’re used to a steady income flow from the business.

Pitfall #6: Taking Your Eyes Off the Ball

Once a decision to sell has been made, there’s a tendency for owners to mentally “check out” of the day-to-day. However, both Seth and Tom emphasize the importance of staying fully engaged until the deal is done. “The deals are not done until the money’s in the bank,” Tom advised, underscoring that a sale can fall through at the last minute.

Seth likened it to playing the childhood game of Chutes and Ladders, where even when you’re close to the finish line, a wrong move can set you back. Yes, the finish line is in sight but don’t take your eye off the ball.

Until the ink is dry, owners need to keep their focus on business performance, ensuring they’re still running at full capacity and delivering the value buyers expect.

Final Thoughts: A Sale is a New Beginning, Not the End

Selling a business isn’t just about an exit; it’s a transformation. Seth and Tom’s conversation offers invaluable insights for business owners contemplating this move. The process can be emotional, complex, and sometimes daunting, but with the right team, clear expectations, and careful communication, owners can ensure a successful and satisfying transition.

As Tom wisely put it, “The team that you can trust because it becomes bigger than you.” For those considering a sale, his advice resonates deeply: find a team that understands your vision, your journey, and your goals, and lean on them as you prepare to step into a new chapter.

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