Several times a week I talk to people who want to sell their businesses. Unfortunately, in most cases, the owners who want to exit the business have not done the work necessary to ensure that their business will be valuable to a new owner. This is quite tragic because these owners will end up shutting down the business or spending years getting the business ready for sale instead of living their dreams. If these owners had systematically developed their business in most cases the business would be saleable.
Here is what buyers are looking for when they come knocking on your door to see if you are
interested in selling.
#1 Buyers want a profitable business. Without profits, business purchases are very very
difficult to justify. Unless you have considerable value in your assets, your business is
essentially worth nothing. Therefore, the first thing you need to do is improve your profitability. Feel free to email me firstname.lastname@example.org if you would like my article on 7 Key areas to Focus on to Increase Profitability. The higher your profitability the more likely you are to get a high valuation of your business and the greater chance you have of selling your business.
#2 A Business that is Not Reliant on You. It seems most of the business buyers that we are
working with are looking for a business that is not reliant on the owner for the day-to-day
operations. Businesses that are run remotely seem to be of more interest to prospective buyers than businesses where the owners are engaged in the day-to-day operations and where the business is reliant on the owner. In speaking to business owners who are looking to sell, one key piece of advice I give is to build a management team where your input is more visionary and less operational.
#3 A Stable Business: According to a 2017 BDC study, 61% of business buyers are looking for a business that is stable and has consistency of sales. Peaks and valleys of your revenue over
a period of time can be a deterrent to prospective buyers. A critical concept for you as an
entrepreneur that is looking to sell your business is getting clarity on how you can have
consistent revenue streams year around and year after year. Consistency also includes
ensuring that your team is stable. A team with low turnover indicates to buyers that you have a culture that people want to be a part of and therefore one less worry for them in the acquisition of your company.
#4 Growth Potential: When we work with buyers, we often hear that they are willing to buy a
business at any given price if there is an opportunity for growing the business and paying for the investment quickly. If you have a business that is in decline or has little potential for growth, your chances of selling your business are slim.
#5 Diversification or Consolidation. Your business is valuable if you are a strong competitor
or have a specialized market niche. Often buyers of businesses come from the same or similar industries and may be looking to purchase increased sales or specialized skills. Your business is valuable if you have proven that you own your corner of the market and have a team that understands your profitable niche.
Don’t leave preparing your business for your exit until it's too late! Start the conversation early with your family and your trusted advisors and enable them to support you in your sale and exit of your company.
Dave Fuller, MBA is an Award-Winning Business Coach and Licensed Business and Commercial Realtor and the author of the book Profit Yourself Healthy. Questions about your
exit strategies? Email email@example.com