It is always interesting to dig behind the scenes and to find out what really drives a small business owner. You may be asking yourself how this is relevant to the question at hand? Well, finding that key motivator that inspired the current owner will help you to identify other potential buyers that meet the same type of profile. For certain people it is all about the lifestyle; about the freedom that they feel like they having actually owning their own business and having no one else telling them what to do. For others, they may just be very good operators that are able to make a lot more money working for themselves then somebody else. The ultimate goal is to sell your business for as much money as possible and to do that you are going to have to build value. Building value is not as easy as just inflating the numbers, or even using some rule of thumb valuation methods. Value is built in different ways for different types of customers; what may be important to one could be completely worthless to another. For example, there are certain buyers that could care less about the numbers a store is currently doing because they love the location and the concept and are 100% certain that with a little tweaking they can make it profitable in no time at all. On the other hand, there are going to be buyers that wont touch a store that is losing money with a 10 foot pole; unless it is consistently making a healthy profit they do not even want to take a look at it in person.
Adopting the proper marketing strategy to maximize the business valuer can help make you a lot of additional money. Or, if handled improperly, it can literally cost you a fortune. Below you will find a few helpful tips that can help you to achieve the former goal and avoid the latter scenario:
- Opportunity To Grow: Although there are always going to be a few to the contrary, entrepreneurship typically attracts a certain personality type that likes to make things better; to watch a business grow. Make sure that you highlight just how this can take place for a new buyer by walking them through some of the positive projects you have been working on as well as the negative aspects where you are failing. Instead of avoiding the areas that currently need improvement you should find a way to show the prospect how they will be able to realize major benefits once they have purchased the business and turned things around using their skill and/or experience.
- Avoid Inconsistency: There is nothing that will kill a deal faster then inconsistencies and its breeds mistrust. If you are stating that sales are at a certain number annually then they better meet those expectations. If the business is being marketed as a well maintained and respected establishment then it better be both physically and digitally clean,; showing well in person and with good reviews online.
- Long Term Records: If a business is only capable of showing operations for a short period of time this leaves the future projections unpredictable. Even if it takes you a couple weeks of digging through paperwork stored away in dusty old boxes and endless hours in front of a computer updating Quickbooks. the time will be well spent. A buyer is going to be a lot more comfortable being able to track the data for at least a 5 year period compared to just the most recent years figures. It also helps you avoid any unforeseen complications discovered during the due diligence process and to prepare a palatable explanation for any unsightly past fluctuations.
- Transition Period: Owner operated businesses can be tough to sell because the entire company typically revolves around one person. It has taken the current owner X amount of years to become proficient at what they are doing, and convincing someone else to go through that same type of learning curve can be daunting. This is especially the case when the profits are weak in the first place as it is likely the prospect would be able to make more money and work less taking a regular job. Preparing some sort a guide or manual and offering a period of free training are great ways to mitigate this problem, as well as introducing the buyers to key employees that are willing to assist throughout the process.
- Automated Processes: In this day and age, it is just plain lazy not to utilize the amazing technology they have available to automate and simplify business processes. There are some owners that complain about the monthly expense, but the timer alone that they save will save you a small fortune in the long run. That, and there are now many software programs available to use for free; the companies just end up using your data to gain there own valuable insights and everyone is happy.