Trying to sell a business is a daunting task. There are some steps that you as a business owner can take to make your business more attractive. Read on to learn about what you can do to make your business stand out to potential buyers.
So first off let’s get the buyer mentality concepts out of the way:
– Potential buyers need some sort of assurance that the business they buy will not flop
– They typically want to buy businesses that are stable and offer room for growth.
– Usually they are looking for more beyond a valuation, many times leaning on their business broker and his/ her experience to provide additional insight.
– And last but not least, they need to really feel good about their decision and sense an opportunity!
So as the current business owner, you need to consider all of that. Here are some steps you can take as a business owner to make your business more attractive and therefore easier to sell.
1. Have a valid reason for selling your business.
Potential buyers often want to know why you are selling your business. Buyers aren’t interested in purchasing failing business. They generally give preference to scenarios where the owners are selling their businesses for a personal reason, family situation change, relocation, a need for change, wanting to liquidate their holdings, etc. Create a good and valid reason for selling and painting the picture well is a big part of a successful sale.
2. Prepare an information package of your business.
Sometimes, this is called an executive summary or perhaps you might even have a full-fledged business plan. That said, if you don’t, a simple guide for potential buyers letting them know exactly what your business does, describing products/ services you offer, including photos and client testimonials/ customer reviews, etc…goes a long way. The adding to that some competitive advantage concepts, what the market is like, the kinds of opportunities that exist for growth, primary and secondary target audiences, etc…all provide substance on which a buying decision and subsequent offer could be made.
3. Determine a Range of Value
Have your business broker conduct a valuation if you have not already done so. Having a realistic range of what your business is worth is crucial. Frank and transparent conversations with your business broker is definitely the way to go. Make sure you spend time understanding how the valuation is done i.e. the value of your business isn’t dictated by your physical assets only. Some buyers might even pay more for an established business with intangible assets such as a good reputation, trustability, good customer care and expertise garnered over time. Having an independent source valuate your business will help you and potential buyers coordinate expectations about business value and reach a point at which they can make a reasonable offer. Remember, your “great deal” can crash if buyers and sellers have radically different ideas about the business’ value.
4. Think of ways to add value to your business pre-sale
Creating a strategic short term business plan can help you add value to business before it’s sold. Things like reducing customer concentration, focusing on core competencies, streamlining processes, and reducing expenses are some goals that can help make your business more attractive.
5. Target & Qualify Potential Buyers
Smaller companies often have a large number of potential buyers. However, many buyers that express interest in a business may not be qualified to purchase it. Determining which potential buyers are ideal for you might require outside help. Hiring a business broker to pre-screen potential buyers can help you select the most qualified buyers. Allowing a business broker to screen your potential buyers gives you more time to focus on growing your business instead of dealing with unqualified buyers.
The process of selling a business can sometimes be long and stressful. Hiring a business broker to help you put your ducks in a row can greatly lessen the burden. At The Powell Group, we have decades of experience in business brokerage and valuation to help make selling your business a smooth process. Contact us at (806)-239-0804 or click here to visit our website and have one of our professionals assist you along the road to selling your business. We will provide you with the assistance you need.