— May 23, 2018
You’ve invested your time, energy, and money into your business, and now you’re ready to get the maximum output from your efforts. According to BizJournals, you’re not alone. In 2017 9,919 businesses sold, which was a 27 percent increase from 2016, some the highest numbers since 2007. The market should make you optimistic, but how do you sell your business? Or more specifically, how do you optimize your business to find the right buyer, at the right price, at the right time? Follow these recommendations to get top dollar for your business.
Know Your Worth
Before setting a listing price or viewing bids, it’s important to get a professional evaluation of your business. Contact a business appraiser to get an understanding of what your business is worth and determine a realistic price. The appraiser’s evaluation will give a good indication if your business is ready to sell or if it needs more time. If you’re happy with the evaluation, develop a prospectus with your appraiser for potential buyers.
Prepare Your Finances
Prepare for endless questions from your buyers about the business’s current health with comprehensive financial records. Compile your financial statements, tax returns, etc. from the last three years and review with an accountant. Make several copies of the information for potential buyers. This preparation will give you credibility among buyers, as they’ll be asking for this information right away.
Get the Timing Right
The right time isn’t necessarily when you want to sell, but when other people want to buy. Many business owners sell when their profits are low, the customer base is dwindling, and market interest is decreasing. Theoretically, this is the worst time to put your business up for grabs. Sell when your business is doing well and when the market is interested in your services. Find updated and consistent market information by following a handful of credible economic blogs for information about consumer spending habits, current interest rates, etc. If you and your market are currently successful, buyers will feel confident that their investment is worthwhile.
Gear Up Your Marketing
81 percent of shoppers search online before making a purchase. This doesn’t apply only to electronics or footwear, but a holistic market trend of how people conduct pre-purchase research. This means that your first impression with buyers happens before they even contact you. If they Google your business, will it show up on the first page? If it does, will anything less than reputable show up? Can they follow you on social media? Based on your social media management, would they want to? These are all questions you should be asking when selling, because this is how buyers are shopping in 2018. If your marketing is strong, not only will more people find your business, but they’ll leave with a better impression of it.
Expand Consumer Base
There’s always a fear when buying a business that new ownership will drive customers away. If your customer base isn’t already diversified across a variety of geographic areas, backgrounds, and demographics, work to expand the customer base. The more varied your customer base is, the more confident buyers will feel about their newly acquired business. Taking your marketing to the next level should work in tandem with this goal.
Solidify Your Systems
It’s nerve-wracking for buyers to absorb an entire team and their processes, so make the transition seamless with comprehensive manuals, efficient operations, and a solid management team. Create an operations manual for new leadership to follow and ensure all daily processes are as streamlined as possible. If there are existing processes that can be improved, work to establish these before selling; or, at the minimum, provide your buyer with a detailed plan for improving operations. Identify someone from your management team to actively work with the buyer so that new ownership will have a long-term, designated resource for questions and concerns.
Ultimately, selling can be worthwhile and financially-sound step as an entrepreneur. While the road to selling can be time-consuming and complicated, optimizing all of these factors can make the process easier and faster for you.