You might be an expert in selling your products or services, but do you know how to sell your own business?
It’s something most of us will never do, and, unfortunately, there’s very little you can do to prepare for it.
However, that doesn’t mean you should just sit there and wait for a buyer to magically take interest. There are some assets that are increasingly enticing to prospective buyers, and integrating them into your business can improve its saleability significantly.
In this article, we’ll take a look at some of the assets and analyse how you can integrate them quickly.
A built-in audience or customer base
Building a passionate and engaged audience is extremely difficult. It’s one of the main reasons buyers choose to take on existing businesses, as it saves them the time and labor of establishing a strong relationship with a customer base.
Stores don’t find customers overnight and businesses have to earn loyalty, but once you’ve got it, your business receives a significant boost.
A stable audience with a consistent history of interaction (whether that’s simply reading a weekly newsletter or placing an order every Christmas) is extremely important. It tells potential buyers they don’t need to worry about peak periods or the early few months, as there will be plenty of loyalty left over for them to capitalise on and keep the business ticking over.
That’s even more important when you’re dealing with a specialist audience. Even businesses that might not necessarily be turning huge profits or even non-profits in some cases are attractive to buyers, because there’s always a built-in audience to launch new endeavours to.
Take nonprofits such as Vet Comp And Pen or Big Brothers, Big Sisters, which serve veterans and young people respectively. These are huge audience bases that continue to grow year on year, and will always need the services on offer from small businesses and nonprofits. These enterprises have grown their audience through an essential service, and through that earned trust for a number of years to come (whatever the ownership situation).
While you don’t necessarily have to offer a public service, cultivating a loyal audience who needs you regularly (even if it’s only to pick up a Valentine's Day gift every year) is an important part of getting recognised by potential buyers.
A positive cash flow
You don’t need me to explain why a positive cash flow in your business is a good sign to potential buyers.
The higher your cash flow, the more marketable your enterprise is to buyers looking for something they can continue to grow from the off. Even conservative buyers want to see an immediate ROI, and the higher your cash flow the more that the new owner can pay in dividends and invest in future growth.
If your cash flow suggests an upwards trajectory, buyers will see purchasing your business as less of a risk and less of an immediate upheaval.
If you’re a B2B operation or have a wide selection of clients, follow Merchant Maverick’s advice and focus on improving your invoicing process to get them paying on time to immediately improve your cash flow.
Experienced top-level staff
Staff make a business, even in the selling process.
A competent buyer picking up all the assets of a business with the aim of continuing on with it will be looking for experienced existing staff to help them with the process.
People that know the ins and outs of a business are invaluable, helping to keep things ticking over during the sale process and spot potential issues in suggested changes. After all, who understands the processes of a business better than the people who live them every day?
Ensure you have not just executives, but managers and creatives on board who have a strong understanding of your business and are equipped with the knowledge to make a wholesale purchase more attractive. Even if a new owner wants to bring their own people in, they will be attracted by the prospect of a few key individuals who can ease the transition.
Never underestimate the power of insight and lived experience within complicated industries.
Extra tips for selling your business
To close off, let’s look at some tips for making your business more appealing during the negotiation process.
Talk to multiple buyers
There are a few simple rules in life everyone should follow.
Never take the first offer is perhaps the most important.
Even if you want to get your business sale over and done with quickly, it’s important to not let yourself get drawn into the first offer on the table, even if it’s a relatively good one,
How can you know how far your potential buyer is willing to go in terms of price if you never ask them? First offers are always conservative and should be treated as a base to build the discussion upon. You’re limiting yourself even further if you only stick to one potential buyer.
Isolating yourself is one of the worst things you can do in a negotiation. Interest from other angles gives you leverage against particularly interested buyers and allows you to get both a better initial price or better position in the company going forward, should that be of interest to you.
Of course, if you’re trying to be more discreet about your sale, this might not be the right avenue for you. However, many buyers will be willing to stay quiet about a deal, especially if they feel like it might hurt their chances against the competition.
Let marketing materials tell your story
There are two things you should never underestimate during the selling process:
- The power of your marketing materials
- The shallowness of buyers
Many sellers will be drawn to your business based on a first glance. Yes, they’ll look into the finer details as the deal progresses, but you have a brilliant chance to wow them and make up their mind for them with the right marketing materials. After all, they’ve convinced customers and clients to buy into you before.
Tell the story of your business much in the way you would to one of them. Let your promo videos and content explain where you’ve come from, highlighting the room this business still has to grow and the exciting roots that can continue to be used in future promotional material.
Marketing materials can also help explain problems with the company. Bad years, declining profits and lost clients can all be put into context. If you can’t present a coherent and accurate story of your brand through marketing materials, buyers will find it harder to understand what they’re supposed to get excited about.
Related: Business Sale Presentation Template
Don’t lie or conceal weaknesses
The process of selling a business is an incredibly thorough one. If you’re trying to conceal something negative about your business it will come out, so it’s best to never try.
You might think revealing one of your business’ major weaknesses could tank the sale, and you might just be right. However, you don’t know that, and nothing is going to do more harm to the sale and your relationship with the buyer than concealing problems or outright lying.
Any buyer worth their salt will be doing extensive due diligence, and bringing it outside parties to help them with it. If a seller finds you’ve been lying to them all this time they’ll most likely feel driven to pull out of the sale. Best case scenario? You’ll lose your leverage and be forced to drive down the price significantly.
Be honest about issues with suppliers, production, down periods and anything else that might cause alarm. If you can explain why they happen and how other factors mitigate their damage, you’ll only strengthen your position as a seller.
Keeping things simple is a great rule to follow in general when selling a business.
NB: Complicating the issue or tangling yourself in a web of self-promotional rules makes it impossible to find the right buyer and keep things on your terms. Follow these steps and ensure your business features not just a prominent "For Sale" sign, but these assets.