I understand that there is a lot of (unnecessary) trepidation around selling your business coming off a pandemic year, especially if it is a construction estimating business. Again, there should not be because there is a low supply of inventory and buyers are willing to accept 2019 valuations if they see the data trending back towards those numbers. But whenever you want to sell your business, whether it is today, in 3 years, or in 30 years – and no matter what industry you are in, consider these 6 steps to make your business as attractive as possible to potential buyers.
Step 1: Work with a Broker
Obviously, if you are an Annapolis-based business, I hope that that is me. But even if it is not me, find a broker that you like and trust and work with them. Someone in my profession is best equipped to make sure that:
- Your business is accurately priced to move, and you are neither leaving money on the table NOR pricing yourself out of a sale
- Help you discretely market your business without giving away that your business is for sale.
- Help manage buyers.
- And help you manage the larger brokerage process.
If you have not sold a business before, then I strongly recommend that the first time you try to do so is NOT with your life’s work. A broker’s commission is well worth the guidance and support we provide.
Step 2: Organize Your Finances
The easiest way to be more appealing to potential buyers is to have clean and organized financials. It does not mean we have not sold businesses whose financials were a mess. Believe me, we have sold businesses that kept all their nightly earning in a shoebox – just long enough to take the cash over to Severn Bank to deposit it.
However, during negotiations, buyers will want to see why your business is valued at its listed price. In order to prove that, you will be required to share some financial information. By being prepared, you have become significantly more attractive to a buyer who might be interested in investing in your business.
And if you are a cash-based business and are not taking advantage of Severn’s policy of not taxing your cash deposits, then
- Shame on you. And
- Email Amy Lee and/or Robert Gazic today and get more information about Tell them Steve Palmer from Transworld sent you.
Step 3: Prepare a Proper Story for Your Financials
A buyer is bound to judge your business quickly based on your past performance. The first things they see or read will naturally be their first impression so you need to make sure your financial story is clear. For instance, if you can explain the ebbs and flows of your most profitable and least profitable years then a buyer can be more trusting of the value and potential success of your business. If not, it will just look like you sometimes do not do well financially, and that does not bode well for confidence in future success.
This is information that needs to be communicated with your broker so he can represent you honestly and thoroughly as buyers reach out. Remember, they are your first line of defense. It is our job to make sure that random buyers calling about your business can actually make an offer on your business. And to do that, we need to first be able to entice them.
Step 4: Highlight Your Strengths
In order to attract some of the best buyers, you need to understand how to properly highlight your strengths. The right buyer will want to know how the business can continue to be successful without your leadership. A business that relies too heavily on current ownership skills could be seen as risky to a buyer. Therefore, you need to present how and why your business is profitable beyond the personal goodwill, personal skill, and personal relationships of the owner.
In essence, highlight the strengthens that will continue long into the future after you have left it behind to sip Mai Tai’s on the beach, play ball with your grandchildren, or start that next passion project!
Step 5: A Little Curb Appeal Goes a Long Way
If your business has a storefront, make sure it looks appealing. You want to catch a buyer’s eye. You can do this in some simple, cost-effective ways. For instance, potted plants near the entrance, along with proper exterior signage. You can also have a window display with your most recent launches – therefore, make sure the windows are clean and the door is freshly painted. And in case there is an upcoming holiday, go ahead and add some decorations!
If you are not sure how to do that, your broker should be able to introduce you to someone who can help. You are a team in this process – you should lean on each other.
Step 6: Find the Right Buyers – Do not Wait for The Buyer to Come to You
Selling a business is not like selling a house. There are websites that we recommend using to advertise your business. However, we never recommend simply advertising online and waiting for buyers to reach out. Many businesses do not sell, but a proactive sales process is much more likely to make a sale happen.
We at Transworld are the largest business brokerage franchise. We have over 600 agents currently working with buyers every day. Our network is a key factor in our customers choosing to list with us. And whether you elect to use us or another broker, you have a much better chance of getting the right buyer to the table by leveraging the broker’s business network.
Those are 6 quick steps, but I am guessing that doesn’t answer all your questions. If you have more, please don’t hesitate to reach out to me at [email protected]. Selling a business is a big decision, and we are happy to assist you in that process.