What Matters Most When Selling Your Business?

Selling a business is a complex process. Once you decide that you’d like to sell it’s difficult to know where to start. More than just a starting point, where should you focus? There isn’t much point in dedicating time and energy to an element of the sale process that won’t give you much of a return. Instead, put your resources to use by focusing on the elements that will make your business appealing to the largest number of potential buyers.

Finding a buyer for your business is about more than just the purchase price. Prospective buyers will want a full view of where a business sits in terms of market position, accurate financial records, transition plans and assurances that the sale process won’t significantly impact daily operations and revenue.

How to Prioritize During the Sale of Your Business

Every business owner started out with a dream and a bit of working capital. When the time comes that you want to sell your business it is important to ask yourself why. Understanding the reason behind a sale will help to inform a business broker about the best way to create a strategic marketing campaign designed to meet your needs.

Understanding the Reason Behind a Sale

• The reason behind the sale of a business will have an impact on marketing strategies, sale price and timeline. Listing without a clear vision as to why you want to sell often comes along with unrealistic expectations and missed opportunities. In the event of a family emergency or illness the speed of a sale might take priority over sale price. Those looking ahead to retirement have the option to be more patient, creating an exit plan and focusing on finding a specific type of buyer.

Know Your Market Position

• Carving out a strong position in any industry is difficult but incredibly important. A brand that stands out from the competition is very enticing to potential buyers. The best way to do that is through strong branding, notable products, reliable services and innovative operational processes. A strong market position combined with ability to build on the existing branding is a major draw for potential buyers.

Review the Saleability of Your Business

• It is easy to become attached to a business or brand that you have spent years building. It is important to view your business through the eyes of a potential buyer. This means analyzing any pain points, liabilities or debts and diagnosing whether they are short or long-term issues. It is important to show that your assets outweigh any liabilities or that it’s possible to demonstrate a realistic plan for repayment. In addition to weighing out debts versus assets prospective buyers will want to review financial statements for the past couple of years as well as future trends for the upcoming several years.

Assess Your Customer Base

• A robust client roster is the most valuable asset that a business can have. During mergers and acquisitions having a record of customers is a major selling feature. What makes a valuable customer base? Everything from size, diversity and brand loyalty are contributing factors to what makes a valuable client directory. This combined with growth potential will let buyers know that purchasing your business is a safe bet. It is always a good idea to build up a customer base before listing a business.

Know What Your Business is Worth

• Like anything, a business is only worth what someone is willing to pay for it. It is easy to overvalue a brand that you’ve spent years developing. This can result in unrealistic listing prices. Ultimately what sets the sale price of your business is the current state of the market. A professional business valuation will help to set a realistic goal and listing price.

Increase the Value of Your Business

• When looking through the eyes of a buyer there are a few key components that will take centre stage, namely cash flow, revenue, organization and presentation of financial statements. Working with financial professionals can help to organize the books, review debts and liabilities, update any software/payroll systems and automate financial reporting systems. By keeping everything up to date you’ll not only be able to showcase current numbers but show that you are on the cutting edge of office technology.

Create an Exit Strategy

• It is important to create an effective exit strategy that will consider your goals, as well as the goals of the buyers and operate in the best interests of employees and management teams. A business that relies heavily on owners to operate on a day-to-day basis isn’t appealing. In fact, it can turn potential buyers off. One of the best things that you can do during a sale or leading up to one, is to get organized and make yourself expendable. A thorough exit strategy should include:
  • A plan to maximize the value of your business
  • Planning ahead for tax season, both for yourself personally and for the business
  • A transition plan
  • Determine the new roles of the owners during the transition process

The Best Way to Sell: Working With an Experienced Business Broker

When you want to sell a business it is incredibly important to perform due diligence, stay organized, enlist a team of professionals, and keep confidential information secret. The best way to do all of these things is by working with a reliable and experienced business broker. With wide networks of local experts behind them brokers are able to connect clients with lawyers, valuation experts, accountants and any other experts that you may need on your side.