For most small business owners the ultimate goal is to be able to sell their business… a big $$$ check, a small celebration and off they go into the sunset. Unfortunately, not all business owners are aware of what it takes to make this dream a reality.
As a Business Broker for many years, I’ve had the opportunity to work with countless buyers and sellers, from a wide range of industries. I can tell you that the average business seller gives very little thought as to what a potential marketplace might demand, at least until it’s time they put their own business up for sale.
As an Exit Coach, I help clients enhance and position their business to sell. We look for ways to strengthen and improve the business setting. Ideally, these changes and improvements are in place long before a business actually goes on the market. The overall goal is to boost the value of the business, increase a potential sales price and position to attract interested and qualified buyer candidates.
No two businesses are exactly alike but there are some issues that impact all businesses on the market:
Revenue & Profit- Most buyers are looking for a business that makes a profit. If your business has continually lost money and is not profitable, it’s not likely to sell. There are of course always exceptions…for instance, if the business offers a truly unique proposition or there’s intellectual property belonging to the business that has real value, then you may still be able to attract potential buyers.
Good Books– First impressions are very important in the world of business acquisition. The financial books and records are an area where this holds especially true. It is important that the financials are in good order if you want to be taken seriously by potential buyers. A quick way to lose a qualified buyer candidate….reveal poorly managed financials. A buyer will see this as a huge red flag. It will suggest that the seller doesn’t value the most essential area of your business… it will cause the buyer to wonder what other areas of the business are in disarray. Buying a business is not an impulse purchase. Most buyers move slowly and thoughtfully through the process… they watch for clues.
Growth Trend– Most buyers don’t buy in a dying industry but they will buy a business with problems! The average buyer hopes to see a positive growth trend in the industry they are considering. But remember, what’s going on in the industry and what’s going on in the business can be two very different things…whether on a positive upward trend or a negative decline, buyers will want a reasonable explanation for what they are seeing.
I remind clients that while they need to be realistic about the prospect of selling their business, there are many steps that can be taken to increase the chances and odds for success. When it’s time to sell, having a prepared business is key. The process is usually long and not always easy, that’s for sure. Sellers need to make certain that they have trusted advisors who can explain the processes and answer questions as the transaction moves along. If you have questions or need additional information on planning, preparing or positioning your business for sale, please feel free to contact me.