This year has been a rough time for many businesses. With customers staying home and dealing with reduced incomes, profits are dropping. Business owners have to implement strategies to keep their employees and others as safe as possible. It’s impossible to predict when things will get better.
If your company doesn’t seem like it’s doing well, it can feel like both the best and absolute worst time to sell. Selling a business that has problems is a daunting prospect, but it’s far from impossible. As you read on, you’ll learn techniques and strategies on how to sell your company, even if it’s not performing well.
Be Honest
If profits are down or your business is attached to substantial debt, that’s not the first fact that you’d be inclined to share with a potential buyer. Eventually, these essential financial facts will need to come forth.
While it’s important to focus on your assets, never try to hide the reality of your company’s finances with a serious buyer. That said, it’s smart to have some thoughtful explanations of any issues. Be ready to explain how these roadblocks appeared and why they’re not insurmountable.
Identify Your Strengths
An under-performing business may be struggling overall, but you know your company inside and out – there’s at least one area where it shines. It’s possible that one aspect of your product or service isn’t doing enough to keep you growing, but it would be beneficial somewhere else.
Strength: Your People
Perhaps your employees are a highly skilled group that can move mountains as a team. You’ve invested a lot of time and money in making sure that they’re well trained and well suited to their roles.
Anyone who buys your company gets to benefit from a group who are already up to speed and have been vetted as accomplished and diligent workers. That’s a huge boon compared to wading through piles of resumes and hiring people one at a time.
Strength: Your Connections
Another company might be making more money than you, but the relationships that you’ve forged offer another significant type of value.
As you identify your company’s value, your client list is too important to overlook. Winning over a first time customer can be expensive and time consuming, so your list is a handy shortcut for whoever takes charge.
You’ll also want to consider relationships with other companies. If you’ve collaborated with a great group in the past, your business’s new owner might get to benefit from that link in the future.
Strength: Your Creations
This strength varies widely by the industry. If you own a tech company, your team may have programmed an app in a manner that others would love to incorporate. If it’s a restaurant that you’re planning on selling, your recipes have some fans.
Related: How is Intellectual Property Valued When Selling a Business
Consider the Urgency of Your Sale
If your business is already facing challenges, it’s important to be realistic about the chances that fortune will improve. It’s hard to admit to yourself that your project is likely to continue struggling, but it’s essential if you want a successful sale.
Think about further factors that might appear in the near future. If competition has overwhelmed your business’s abilities, you may wish to sell quickly, before they snag a greater percentage of the market.
It’s also possible that something good is in the works. Maybe a sale to a larger company would allow your service to really thrive in a year or two. Either way, these factors come into play when you’re considering whether to accept an offer.
Another Note on Timing
This piece of advice almost feels contradictory: Once you’ve figured out when you want to sell your business, also know that you may not be able to stick to your initial plans.
Even when a business is an all-around hot commodity, the sale process could take a month or a year. In an uncertain economic climate, the sale of a business that’s not performing well becomes increasingly unpredictable.
On average, it takes between six and 10 months to sell a business. Don’t lose hope if a good offer takes longer than you’d intended to appear, especially if you’re serving a smaller, niche audience. Also keep your eyes open for great opportunities that might pass you by when you’re not quite ready.
Hire a Professional to Help You Make the Deal
To make the most of your business sale, work with a team that understands the ins and outs of your situation. A Business Brokerage or M&A Firm has invaluable information about the local business climate, financial expectations, and the legal process that you’ll need to follow.
When choosing a broker for your sale, a little research can guide you toward a good fit. Find an organization that’s experienced with your industry. It’s also helpful if their clients’ businesses tend to be similar in size.
In general, it’s smart to hire a firm that only gets paid once they’ve successfully sold your business. This demonstrates their investment in your business.
More People Whose Opinions You Need
In addition to a business broker, bringing in other outside resources can add a lot of perspective.
Talk to your lawyer about any past or ongoing legal issues that your company has faced. You’ll want the attorney’s go-ahead before you start making any claims for your own financial protection.
What If the Business Still Won’t Sell?
If your overall business just isn’t attracting any viable offers, consider whether you’ve overestimated its value. There’s another tactic that you can take, too - splitting your business into more easily digested pieces.
Businesses with diverse offerings may become more attractive to buyers on the prowl when they’re segmented. One product or one location might catch someone’s eye where five products or three locations didn’t.
This strategy can develop in one of two ways. Either you the entirety of your business to several people, or you hold on to part of it. Maybe there’s a smaller portion of your company that has potential you’d like to develop. This could lead to a fresh start enmeshed in familiar elements.
To Stay or To Go?
Even if you pride yourself on making solid, logical decisions, you might wake up one day and realize that selling your business has been emotionally draining. It can be hard to let go of control after you’ve spent so much time building your company.
You might find that staying on with your company under the direction of your buyer is a more relaxing way of being involved in the organization you’re so deeply invested in. On the other hand, you might find that it’s better for everyone if you step down and let the new crew take complete command.
In the meantime, work with the company’s new owner to create a transitional plan. Give yourself ample time to wrap up any projects, train any employees on changed duties, and generally settle any outstanding problems.
Selling Your Business: A Challenge You Can Face
Life is full of changes and selling your company is a big one. With the right strategies and a hearty dose of optimism, even a business that has been underperforming can be sold with grace.
More on the topic: How to Sell a Business That Is Not Profitable
