When you hear about someone who sold his or her business, do you ever wonder, “how did that happen? what about me?” Yes, there are some secrets, but if you read on, you’ll get the insider track, too.
The buyers’ eye view
If you’re a business owner, you know the importance of understanding your buyer. The same is true of selling a business. When you get wise to the things your potential buyer values, you can work on building a multi-faceted gem of value, instead of relying on a single quality to drive the decision.
And, payoff is that every time you improve one of these, it will improve your business right now.
Broadly, there are six reasons why buyers buy:
Many buyers are attracted by an existing profitable business. As you probably know, building a business from scratch is hard and often long. If the business is up and running, the buyer can short-cut a lot of the sweat equity. Since the current owner will usually end up financing the deal, the new owner will want to know they can pay off the loan and support themselves with the revenue the business produces.
If your business is struggling, don’t take yourself out of the game. Other buyers are attracted by businesses that are not profitable, but have the potential for profits, if a different kind of brainpower, i.e. their’s, is brought to bear.
To what degree could someone else walk into your business, open your operations manual and run the business successfully today? How many key processes, especially those that happen over and over and over have been documented?
That’s the appeal of many franchises. There is a step by step system for success and the operational infrastructure for growth.
What is your niche? What’s the future of the need for your business? Figure it out! On top of attractiveness for acquisition, you gain a clear differentiator and the ability to charge more money for your service, today.
Do you have access to important people in your field or customer base? Perhaps, you know regulators, manufacturers, industry executives, key clients, or potential partners? Or, perhaps, you have a huge following or have established thought leadership?
An existing staff who knows how to run the business is an invaluable resource to a new business owner. They can keep the business on course and alert the new owner about red flags that he/she might not have the sophistication to recognize.
Perhaps, you are in a trade that requires a highly trained workforce. In our boom economy, this is gold. A competitor might be interested in buying you, because it needs manpower to grow.
Do you serve a newly developing part of your community or an inner city location? A competitor might want to expand their service area with a local presence or manage the area’s impossible traffic situation. A national chain might want to expand and buying a business that is knowledgeable about your area and culture gives them a huge advantage and shortens the runway needed to get up to speed.
Now, here’s where your work begins
Commit. You will need to clear out some time and energy to doing some experiments.
Evaluate where your business is in relations to these 6 factors of attraction. You can give yourself a rating of 1- 10, where 1 is never even thought about this and 10 is I’ve got this one down.
Pick an area where you see some potential to focus on.
What are 2-3 things you could start doing tomorrow to shine up that facet. Make sure that you have adequate time and resources to practice.
Commit to doing one of them.
Do it for at least a month
Keep a log of what changes as a result
Let me know what you uncover! And, if you find that this has fallen into the pile of good intentions, I can help. I work with business owners to get and keep their businesses in shape to sell.