Common Mistakes Business Owners Make When Selling Their Business
Most problems in a sale start before a buyer ever calls: a price based on hope, messy books, a business that is not ready, trying to do it alone, or word getting out too early. Here are five common mistakes, and one practical thing you can do about each. Owners in Nashville and across Middle Tennessee run into the same ones.
1. Setting Unrealistic Expectations
One of the most common mistakes is overestimating the value of the business. Owners often have an emotional attachment to their company, which can cloud their judgment when setting a sale price. An inflated asking price can deter serious buyers and prolong the sale process.
What you can do: Start from earnings, not from the number you hope for. For most owner-operated businesses, buyers begin with Seller’s Discretionary Earnings. What Is SDE? explains it in plain terms. A starting range built from SDE is not an appraisal and not a guaranteed price. If you talk to any broker, ask how they got their number and which add-backs they used. How We Value an Owner-Operated Business covers how we build a starting range.
2. Neglecting Proper Financial Documentation
Buyers want clear, organized financial records to assess the health of a business. Incomplete or sloppy financials—such as missing tax returns, inconsistent profit-and-loss statements, or undocumented expenses—can raise red flags and erode trust.
What you can do: Pull together three years of books and a list of add-backs a buyer can test: owner pay, personal expenses, interest, depreciation and one-time costs. The “What to have ready” section of How to Sell a Business in Nashville covers the list. Ask your CPA to point out anything that does not match before a buyer finds it.
3. Failing to Prepare the Business for Sale
Many owners wait until they’re ready to sell before thinking about how their business appears to buyers. A lack of preparation—whether it’s outdated equipment, unresolved legal issues, or an unoptimized operation—can diminish the business’s appeal and value.
What you can do: Make a short punch list: lease terms, licenses, equipment condition, open disputes, and how much of the business depends on you. Fix what you can, and ask your attorney about anything legal. Write down how the work gets done so a new owner can follow it.
4. Trying to Go It Alone
Selling a business is complex, involving negotiations, legal considerations, and marketing to the right buyers. Owners who attempt to manage the process without professional help often become overwhelmed, make costly errors, or fail to reach qualified buyers.
What you can do: Decide what you will hand off before you start. A sale means fielding inquiries, screening buyers, negotiating and getting through diligence while you still run the company. If you work with a broker, ask what they handle, how they screen buyers, how they keep the sale confidential, and how often you will hear from them. If you go it alone, plan for the time it will take.
5. Lack of Confidentiality
Word of a potential sale can spread quickly. In a community like Middle Tennessee, where many owners know their competitors, suppliers and landlords personally, an early rumor can reach employees and customers fast. If they learn about the sale prematurely, it can lead to uncertainty, lost business, or worse.
What you can do: Tell as few people as possible, and only when needed. Ask anyone who has to see sensitive details to sign a non-disclosure agreement first. Describe the business without your name until a buyer has been screened. Sell Your Business in Nashville explains how a confidential process works.
The Short Version
Avoiding these mistakes will not guarantee a sale, but it can make the process more organized and more confidential. Each one comes down to the same things: a realistic range, clean records, a prepared business, clear roles, and a plan for who knows what, and when.
If you would like to talk any of this through, call 615-240-5235 for a confidential conversation. For a directional starting range first, the free valuation calculator gives one.
By Michael DeVault, business broker and BBDG Nashville affiliate at BridgePoint Business Group.
