You’re gearing up to sell a business, and you understandably want to get the best offer you possibly can. If you can somehow manage to spark a bidding war, that’s the ideal scenario. There’s just one problem, and it’s a simple one: to express a point that’s redundant but vital even so, your business is what it is. Misrepresentation won’t get you anywhere in the end.
That means no fudging the stats, pretending to have more customers than you really do, or hyping up your business model as though it’s sure to make incredible profits as soon as you turn it over. There’s only one viable approach: presenting your company honestly, dealing in good faith, and hoping that there’s plenty of interest out there.
That noted, I’m not saying that you can’t take action to bump up the price of your business before you sell it, because you absolutely can. It’s just about throwing in additional elements that can add value. You might not think that such things would matter, but you never know what could convince someone to buy — and a tiny factor could sway a big decision.
Related: Setting a Realistic Asking Price for Your Business
In this post, I’m going to talk about one action in particular: creating business guides that you then offer to prospective buyers along with the business. It doesn’t sound like much, but it can really help. Allow me to explain why.
Documented processes can save a lot of time
What happens when someone takes over a purchased business? Assuming they didn’t buy it to mine it for physical assets and scrap the operation, they endeavor to keep it going: to take advantage of the qualities that made them want to buy it in the first place, and ideally develop it into something even greater. Many entrepreneurs have made their names through buying small businesses with great potential and figuring out how to turn it into real-world success.
Even just keeping a business running can be tricky, though, when the owner doesn’t know exactly how it runs. The easiest scenario involves retaining existing staff and simply allowing them to continue doing what they’re doing — but if an owner is going to helm the business, they need to know how the various operational processes work. If they’re oblivious, then they can’t know what the business is getting right and where it’s falling short of their targets.
And in the event that they don’t want to retain existing staff (or people simply choose to leave with the company under new ownership after you’ve explained what’s happening), they need to know how things work so they can get some new employees working effectively as quickly as possible. The more time goes towards simply figuring out how the regular workload is handled, the more money they’ll lose.
By painstakingly documenting all the processes involved in the day-to-day running of your business and making it clear that they’ll be included in the sale of the company, you can create a much more appealing package for potential buyers. Wouldn’t you pay more for a business with all the processes set out for you than you would for a company that left you in the dark?
Your expertise speaks well of your business
It isn’t typically possible to consider a business asset from all angles: at least, not all that comprehensively. An interested party can go over the books, review the marketplace, look at competitors, conduct their own research into product and service viability, and speak to experts from the industry — but even then they can’t be 100% sure that it’s exactly what they want.
Just as people often have skeletons in their closets, businesses can have unexpected associations. It’s possible, for instance, for someone to buy a business, run it well for quite some time, then be contacted by someone aggrieved with the original owner who wants to undermine the company in an effort to get revenge. Those things can’t generally be anticipated.
Due to this, the more you can show a potential buyer that you — the current owner (and probable founder) — know what you’re doing, the more you can set them at ease about the overall construction and handling of the business. Producing top-notch process/brand guides can really showcase what you’re capable of and make it clear that you can be trusted.
Put yourself in the shoes of an aspiring buyer, and imagine that you were considering two businesses with comparable promise: one with a tempting price but little in the way of support, and another with a higher price but an owner making a real effort to make the purchase easy to justify. Wouldn’t the latter seem like a safer investment? It seems considerably more sensible to pay more upfront for the privilege of making much smoother progress in the long run.
A clearly-defined brand is a valuable asset
Processes aren’t the only things that should be straightforwardly defined through guides. Brands also need clear guidelines — and it’s more important than ever before for a given company to have an established brand, because the level of competition makes it really hard to stand out. The purpose of a set of brand guidelines is to define the brand’s identity and how it’s to be conveyed through content marketing, customer communication, and any other viable avenues.
In addition to running through basic elements concerning brand images and aesthetics in general, your guidelines should outline the story of your brand. How did your company begin? What challenges did you face early on, and how did you overcome them? It might seem like an off-the-wall notion, but you should approach your brand story like you’re writing a captivating book (there’s a clear plot structure outline at Jericho Writers that you can use as a framework).
Related: How to Prepare a Sales Memorandum When Selling a Business
In the end, smart business buyers don’t discard company history: they build on it, knowing that corporate legacies are hugely valuable for suggesting stability and success. If you lay the groundwork, they can then tell their part of the story: how they came along to usher in a new stage of the company’s growth, acknowledging what came before you while looking ahead.
Your process guides will help the eventual buyer to keep the business going, but they’ll surely want to start running some promotional campaigns to build up some hype for the revamped operation: under new ownership, getting bigger and better, lots of exciting things ahead. And before they can really commit to promotion, they need to have a solid notion of the brand.
Having a set of brand guidelines (for example, 99designs has a great guide to creating one) gives them options and context. Maybe they’ll like what you already built and want to keep it going, in which case they can stick to your logo, slogan, color scheme, etc. Even if they want to move in a different direction, it’ll be useful to know the brand you’d already developed so they can use it to influence their work to some extent.
It can show the value of a consultation service
The purchase of a business isn’t exactly like the purchase of a basic product. When you have a bid accepted through an online marketplace like eBay, you can get the item posted (or collect it in person) and conclude the deal just like that. Aside from leaving feedback, there’s a solid chance that you’ll never interact with the buyer again. This isn’t the case with business buys.
This is particularly true when an entrepreneur decides to buy a business in an industry they don’t yet understand very well. Even after months getting to grips with it, they’re likely to still have some major gaps in their knowledge — so what should they do at that point? Simply try to figure things out as best they can? That’s where having someone to consult is highly useful: and why couldn’t they simply consult the person from whom they bought the business?
If you can provide some excellent guidance through the sales process, including providing the written guides we’ve talked about here, then you can convince the eventual buyer to pay more for the business because they see the benefit of building a business relationship with you. Not only will you deliver them a well-organized business, but you’ll also be there as a contact should they need to get hold of you in the future.
Now, this isn’t to say that you should volunteer to help them whenever they need it. Instead, I suggest offering them reasonable rates for a basic consultation service. If they need your advice or assistance, you’ll provide it for less money than they’d need to pay a regular business consultant. That could be an excellent arrangement for both parties.
Related: Advisory and Consulting Agreement Template
For the reasons that we’ve looked at here, creating guides to your business processes and your brand identity can be highly effective for raising the value of your business before you sell it. Get your approach exactly right and you can achieve an exceptional outcome: selling your business for a great price, and setting up a consultation service that can yield additional income on an indefinite basis.
