As an entrepreneur, you’ve most likely put a great deal of time, thought, and hard work into your business. Hopefully, all of that has paid off in profits, brand recognition, and other important elements. Still, the time comes when every business owner is ready to pass along the fruits of his or her labor to someone new. This articles focuses on how to get buyers interested when selling your business.
Are You Ready to Sell Your Business?
Based on recent reports from various sources, anywhere from 10,000 to 500,000 businesses are sold each year in the United States. Entrepreneurs decide to sell their companies for many reasons. Some fall on hard times and find they’re putting more into the business than they’re getting out of it.
Others reach the level of success they initially hoped for and feel they’re ready to invest their time and energy in new pursuits. In some cases, business owners decide it’s time to get out of the game altogether and enjoy a nice, leisurely retirement. No matter what your reasons for selling may be, taking the appropriate measures beforehand is essential.
Getting off on the Right Foot
First, you need to understand that selling your business isn’t a spur-of-the-moment move. Experts unanimously recommend planning well in advance of the sale. The more time you give yourself to prepare, the better off you’ll be when your business goes on the market.
From the beginning, it’s best to seek counsel and assistance from your trustworthy business broker. Here at CGK Business Sales, we offer a range of services to help get your business ready for the market and connect you with the right buyer. We’ll be with you every step of the way. We know how to get buyers interested when selling your business!
Taking the First Step
Once you decide to sell, it’s time to take a long, hard look at your business. Be sure you have an all-inclusive picture of the money coming in as well as your liabilities and operating expenses. Do you have more coming in than going out, or is it the other way around? If your business is not making money, it is likely not saleable, so having consultants help you do an overhaul may be a good idea, before you go to market.
Additionally, you’ll need to examine other financial factors. These might include sales trends for your products or services. Do sales fluctuate seasonally? Have they been steadily growing or declining? What’s the size and range of your customer base?
Make sure you have complete financial records of your earnings and losses, as well. These and many other considerations will come into play when you sell. Getting all your financial ducks in a row will help tremendously when it comes to generating excitement over your company.
Don’t Overlook the Obvious
Prospects will undoubtedly want to see the financial aspects of your company. They need to get a feel for how much they can expect to gain from buying the business. They’ll want to understand how much of their income may be earmarked for matters other than profit. In all likelihood, no potential buyer will be willing to blindly enter into a purchase.
Still, that doesn’t mean your books are the only things that need to be spruced up. Consider giving your business a physical facelift as well. Give it a fresh coat of paint inside and out. Clean the windows and replace any missing or damaged flooring. Get your office space, warehouse, and other areas cleaned up and organized. Have a landscaping crew come in and revamp the lawn and hedges.
Many business owners are surprised to learn how much of a difference a few small cosmetic changes can make. You don’t have to spend a fortune to greatly improve the physical appearance of your business. In turn, you’ll be ramping up its value and making it more interesting to prospects as well.
Human capital is another overlooked aspect. Rather than starting a business from scratch, a reason for a Buyer to buy your business is for the value of your employees. The more stable and “hands-off” the operations side is, the better. Is there a layer of management at your business that can help the new owner focus on strategy, rather than day-to-day operations? Although this is rare for small businesses, this is often the case for lower-middle-market businesses and a layer of management will make your business more attractive to a buyer. This is a crucial step in how to get buyers interested when selling your business.
Know the Value of Your Business
Once you’ve covered those bases, you can move on to yet another crucial component in the sales process: business valuation. Before selling your company, you need to know how much it’s worth. Some business owners price their companies far too low in desperate attempts to sell them quickly. Others allow sentimental factors to cloud their judgment. As a result, they set unrealistically high prices.
Erring in either direction could cost you a great deal in the long run. Because of that, having a professional, unbiased valuation performed is essential. Different methods or combinations of approaches can be used to determine the actual value of your company. This vital step will draw the interest of potential buyers while preventing you from setting unrealistic expectations for the sale. It will also ensure you get what your company is truly worth from the transaction. A good business broker will know how to get buyers interested when selling your business and setting the correct price is just one of those ways.
Create a Selling Memorandum
From there, you’ll need to develop a selling memorandum. This is a document that will provide prospects a fairly-detailed overview of your business. Exactly which details need to be included in this write-up tends to vary based on the size of a company, its market niche, and other factors.
Some of the most common components of a selling memorandum are descriptions of the business in question, its history, and its products or services. You’ll also need to cover the reason you’re selling. It’s important to provide financial information gathered during the initial phase of preparing to sell as well, but avoid including comprehensive financial statements. Those will come into play later, with prospects who prove they’re truly interested.
You may need to include additional details in the selling memorandum as well. Talking about your company’s strong suits, customer base, number of competitors, and what sets your products or services apart from the rest will help generate additional buzz. Don’t leave out the areas in which your company needs improvement, but don’t oversell those negative points, either. Be sure to list the assets that’ll come along with the sale and mention your asking price and terms, too.
These are only a few of the considerations to keep in mind when creating your selling memorandum. Though this shouldn’t be a complete novel written about your company, it should certainly paint a well-rounded and attractive picture for potential buyers. As mentioned, this can be tailored to your company and its unique attributes. Although these are some high-level points, business brokers write these memorandums in a way that will be the most attractive to the largest numbers of buyers, hopefully resulting in a situation that creates multiple buyers. This is important: Some of these points may seem counterintuitive to a Seller and are best left to a professional, or else your memorandum will wind up in the garbage heap, as buyers give a cursory look to many, many businesses. Don’t turn these buyers off by writing the wrong thing. Have a professional with many years of experience do it for you. They will pay for themselves.
Market Like You Mean It
As you’ve most likely learned during your journey as an entrepreneur, marketing is one of the main keys to success. This concept extends to selling your business as well. You’ll need to advertise to the types of buyers you hope to attract. That means reaching them through the right marketing channels. Business brokers have multiple channels that they rely on to market your business to the right buyers.
Setting Yourself Up to Sell
Those are some of the most imperative measures to take when selling your business. Each one will help to pique prospects’ interest in your company. Preparing yourself to sell and taking all the right steps to do it right can be complicated. Fortunately, you don’t have to do it all alone.
At CGK Business Sales, we stand ready to help you sell your company. We offer assistance with all the essential components of a business sale. From getting your finances in order and determining the value of your company to marketing, negotiating, banking, and legal, we’ll use our knowledge, experience, and network to your fullest advantage to get you the highest price and best terms for your business sale. We know how to get buyers interested when selling your business.