It was five years ago that I created “12 Code Red Seller’s Mistakes.” This downloadable PDF was designed to be a timely guide for printing owners looking to sell their business.

Timely has now become timeless.

Five years later, the 12 mistakes are still relevant. And I see them being committed as frequently as ever. 

In this edition of  “The Bottom Line,” I’d like to touch on several of these mistakes, including an example of an owner who bonked his opportunity to sell because he made a “Code Red” mistake. 

(Note: I’ll share where you can get the Code Red download at the end of this column.)

What is a Code Red for sellers?
A Code Red typically refers to an emergency situation. We sound the Code Red for business owners who are planning to sell their business and have made one of these 12 mistakes. 
As I noted in the Code Red mistakes: “BE FOREWARNED: I’m going to point out things that may make you uncomfortable, maybe even offended.” Believe me, it’s better to make you uncomfortable now than allow you to make the mistakes and wind up in pain later.

I don’t have enough space to delve into each of the Code Red mistakes here, but I’d like to highlight four, and give an example of what happened when an owner violated one of them.

So, here we go!

Code Red Mistake #1: You haven’t developed your own skills, or you haven’t hired talent
Wait, what? Why is this included? Haven’t you built your own business? Isn’t that proof enough that you’re skilled, and your team is too?

In many cases, the answer is no. In case you haven’t noticed lately, the economy has been in a perpetual upswing. There are those who have also built an amazing business by forging new skillsets, keeping up with the times and hiring dynamic new people.

And there are others – those who are clinging to a sinking ship, and hoping that the laurels of the past will be enough to snow an investor. Uh-uh. Not happening.

If you haven’t planned and invested in a company that’s talent-laden and poised for the future, you better head back to that drawing board and start again.

Code Red Mistake #2: Your organization is not very well organized
There are countless owners who have built their business simply through sheer will and hard work. That’s good. No, that’s great, and you should be proud if you’ve done it.

But selling a business to an owner is not about you. It’s about your business, and its potential and scalability. It’s about what remains after you’re gone. In other words, you’re not just selling what you’ve built but also how you’ve built it. That includes how it can grow in the future.

The processes that make your company go need to be organized and documented – from financials to operations to marketing. You must make yourself replaceable.

Code Red Mistake #3: You’re not allowing yourself enough time to sell or transition properly
Rome wasn’t built in a day.  And if one of those emperors had decided to retire early, it definitely wouldn’t have been sold in a day.

Selling a company takes time – 1-2 years at a minimum. I’m not necessarily referring only to the transaction component of the process such as finding a buyer, negotiating a deal and signing the dotted line.  I’ve seen those parts of the process take as little as three months.

I’m referring to the lead-up and the transition after the fact. The preparation of your internal team to ready the company for sale, and then an integrated and disciplined transition to the new owners. 

That three-month turnaround typically only happens in a costly fire sale. A prudent owner does extensive due diligence and really ensures a strategic and patient sale is a good fit for the new owners and the current employees.

So, if you want to retire at age 60, you better start the process at 55. The longer you take, and the more intelligent your approach, the more successful you’ll be.

Code Red Mistake #4: You think you can sell the business by yourself (or you trust yourself too much)
This one always mystifies me: I’ve seen countless owners think they can sell it alone.  They’ve built their business by hiring skilled people along the way.  From press operators, to financial experts, to marketing gurus.  Yet when it comes time to sell, they think they can do it themselves. 

I’m a big fan of self-learning, don’t get me wrong, but do you have time to become a financial and legal expert in M&A strategies? 

Can you quickly become an industry insider with strategic investors and tap into an extensive network where the big players are qualified, ready, willing and able? 


Can you properly value your business like an independent appraiser?
The answer is no, no and more no’s. Not only would this become next to impossible to do in a short period of time (let’s retire while we’re young, right?), but it will also pull you away from what’s critically important: Continuing to grow your business.

Code Red example: Hubris becomes hurtful
I’d like to relate a story about an owner I worked with who violated Code Red Mistake #4. 

His main problem wasn’t his business. He’d created a beautifully niched business with sizable profit margins and a smoothly running enterprise. It was definitely ready to sell, and there were investors lined up, ready to make a deal.

He got in the way. Or rather, his ego got in the way.

You see, he trusted only himself in the end. He didn’t believe the appraisal numbers produced by independent financial experts. He didn’t trust the advice of his M&A advisors as to what the market would bear.

He listened to only one person: Himself.

Now I strongly doubt that’s how he built his business. He was far too successful to have fallen victim to his own arrogance and hubris. 

But when you have visions of multi-million dollar grandeur, you can become a little deluded.  You can get in the way of an opportunity only because you trust yourself more than those around you. In the end, he not only didn’t get the price he wanted – he didn’t sell the business.

I’ve given you four Code Red examples, and one painful instance of what happens when they are not respected.  To learn more about the other eight, visit my website at http://www.rocklamanna.com/download-your-code-red-seller-mistakes.

And if you don’t download it today, you can always check back in five years. They’ll still be just as relevant then as they are today.


Rock LaManna, President and CEO of LaManna Alliance, helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. Rock can be reached by email at [email protected].