Do you own an established business that you are thinking about selling? Is the time fast approaching for you to start your next chapter and you find yourself dreaming about retirement? Are you wondering when "the time will be right"? Well, if you are getting ready to sell and you are not quite there yet, then this article is for you!
There is much to be said about preparing a business for sale and you can find many articles written about preparing for the transaction itself from due diligence on the buyer, to the actual deal structure to the various tax implications the deal structure can have and all the things you can do to improve your exit. The actual transaction is not the focus of this article.
Here we are looking more at the presentation of the business to potential buyers. Think of it like staging the business, like staging a house as you prepare to list it with a realtor. Staging involves things like getting rid of clutter, placing fresh cut flowers strategically in the dining room and making minor repairs and improvements that will have a big impact on the potential buyer.
In the terms of the presentation of your business to the buyer, I want to draw your attention to your social media presence, your customer data, and your business’s credit file (or lack of one).
Back to the idea of selling the family home: you know all those little extra things that you do when you decide to sell your home but before you list, those "honey do’s" that have been on hold for years…. Yes, think of this exercise, like staging your business!
What could you do today, that will make a difference, improve your sell price and positively impact your potential buyer? I’m not talking about the "brick and mortar" aspect of your business, not about repairing a broken door or buying some colourful plants for the office (although that is a good idea). I am thinking more along the lines of what investments you could make, that will create immediately increase your business’s presence and perceived value and those things that will appeal to a buyer.
First, if you asked me, where do I think you will get the biggest bang for your buck, I would say: Social Media. Yes, that online digital marketing world that you might have been avoiding… It makes sense, if you’ve been in business for more than 25-30 years that you may not have kept up with the times, especially when it comes to social media. There are few established small to medium sized businesses that have been able to keep pace with the ever changing demands of social media.
While it is true that there are a myriad of things that you could do, I recommend sticking with the essentials (these can vary depending on your industry) to get your online presence established and at least found on each of the major social media platforms. For this you will need to hire a social media professional, and remember to hire someone that you can communicate with, who will make the effort to meet you where you are at. This exercise is not necessarily about becoming literate in social media yourself, but more about getting your company on the map - so to speak… and remember, a little goes a long way!
Recommended Action Steps:
- One: Get your company established on LinkedIn with a branded Company Page
- Two: Create a Company Facebook page
- Three: Open an Instagram and a Twitter Account
- Four: Claim your business on Google and proactively manage your reviews
- Five: Give your website a small makeover - spruce it up - add some pictures!
Secondly, invest in your customer data. Collect it. Review it. Analyse it. Organize it. Cleanse it. The good the bad and the ugly, this customer data is valuable to a potential buyer. Past customers, current customers, new customers and future customers. Make sure you have company names, contact names, contact information, sales order history, special requirements, contracts, payment terms, average monthly sales volume and lifetime customer value calculated.
The more clutter you can remove and the more shine you can put on the right information the better, and the more access you create to good information, the more insights you can provide to your potential buyer.
Recommended Action Steps:
- One: Create a CRM if you don’t have one.
- Two: Generate an executive summary report from your existing CRM, if you do have one.
- Three: Run the numbers according to the 80/20 rule - Identify any customers who represent more than 20% of company revenue.
- Four: Conduct a Customer Satisfaction Survey.
- Five: Launch a customer appreciation event/promotion and gather fresh customer testimonials.
Thirdly, then is your business's credit report. If you’re a US-based business and you haven’t established a company credit file, do it now. You can kill two birds with one stone here - you can get the money to make these investments and by doing it right, you can use this new business credit to help you establish your company’s credit rating, by getting a couple of reporting credit lines.
Yes, there are business credit programs in the US that are issuing business reporting lines of credit, meaning they report your payments to the credit bureaus. They are unique in that they actually issue the credit to the business and they use the businesses EIN number to assign the account rather than your personal SSN. One of the benefits of using a program like this is that the accounts and the balances do not appear on the borrower’s personal credit bureau, the other is you can get them interest free for a year, and that’s more than enough time to pay them down. Use a program like this and leverage "other people’s money" - remember you can get it interest free for up to twelve months - and you get the added bonus of building your company’s business credit in the process, plus it doesn’t appear on your personal bureau!.
So when you are ready to market your business for sale, along with your glowing online business presence on social media and your clean, polished and focused customer data, you can provide your potential buyer with the company’s business credit report as part of your complete corporate package.
In summary, my advice - get some extra working capital so you can:
- Establish your company’s credit file, and...
- Hire a (proven) social media consultant who can convey your brand.
- Hire a good professional photographer who can capture your team.
- Contract a talented website designer who can refresh your website, and...
- Engage a strategic business advisor who can help you leverage your customer data.
Assembling a team like this will be time and money well spent. Like anything, its not just about hiring an expert, it’s about hiring the right expert for you! Sometimes that is not as easy as it sounds. When you are ready to go get help, ask for recommendations. Talk to a couple of different people, explore the talent pool a little bit until you find someone that you click with.
Video: As a baby boomer business owner, I know I’ll need to develop an exit plan when I decide to sell my business. By Warren Rutherford.
Selling your business is a big deal and this preparation can be seen as a transition. It is likely unchartered territory for you, undertake it like an adventure and enjoy it. Don’t rush. Get it right, right for you that is. I predict that this effort will pay for itself 10 times over, and when the day comes that you do finally sell your business, you’ll look back and be glad you did.
About the author
Written by Bonnie Walker, Founder and CEO, WeLLcome capitaL consuLting LLC.
WeLLcome capitaL offers a wide variety of entrepreneurial financing solutions to business owners including commercial real estate loans, business acquisition loans, and a variety of startup capital and working capital programs, along with an innovative credit partner program.