Improvements to Make Before Selling Your Business
When it comes time to exit your business, you want to do so in a well thought out manner in order to maximize the value you will receive. You have poured your heart and soul into this, and you should receive the fruits of your labor. Some owners find out, however, that their business is not worth as much as they had hoped. This is why you should plan early and look carefully at improvements that can make your business more attractive to your ideal buyers.
Not all upgrades and improvements will provide the same return on investment. With this in mind, it is important to think about the things a new owner will want most when they take over your business, and plan accordingly.
Each business is unique, so this conversation will be different for every owner. That said, there are some general improvements that virtually every business can make to attract more buyers. Here are four of them:
Establish more Efficient Marketing Methods: Your ultimate goal is to increase profitability. This is true at every point in the life of your business, and especially when you are ready to sell. From the buyer’s perspective, revenue is important, but equally important is the direction the business is going. If your sales and profits have been increasingly lately, this is an indication that the business is moving in the right direction. And one of the best ways to increase profitability is to look closely at how you are marketing your product/service offerings to determine what is working and what is not.
For example, is that Yellow Pages ad you spend several thousand dollars per year for bringing the same type of return it did in the past? Or are there better ways to direct your marketing dollars? Have you fully maximized all of the opportunities to market your business online? What about social media, mobile marketing, and email marketing? Your sales and marketing programs should be fully examined and revised toward maximizing return on your marketing dollars.
Create Seamless Processes and Routines: A buyer will want a business that runs smoothly and seamlessly, even without the owner being present. This can be a challenge for some owners who have always played an important role in the success of the business. But when you are planning to sell, this is the time to minimize your own role, and take the time to implement various processes and routines that can maximize operational efficiency and reduce the importance of the owner or any other individual.
Lock in Longer-Term Agreements: Over time, you have most likely built-up relationships with vendors and suppliers, and you may also have good terms and conditions for your commercial lease. Before putting your business up for sale, do what you can to shore up these agreements and lock them in for longer terms, so the new owner will have some stability when he or she takes over.
Invest in Technology and Equipment Upgrades: Technology is continually evolving, and there are always newer and more efficient ways to do business. Chances are, some of your technology and equipment may be outdated. This could be putting you at a disadvantage compared to what your competitors have. Take a look at various types of equipment, computer software, and other technologies that are being widely used in your industry, and make sure your business is up to date with those that are most essential.
Get a Professional on your Team: Selling a business is difficult for owners to do on their own. There is a lot of work that goes into it, such as preparing ahead of time, advertising your business for sale, responding to inquiries, meeting with perspective buyers, and keeping all of this confidential until the time is appropriate to reveal that you are selling to employees and customers/clients. To help ensure a smoother and more seamless process, it is best to work with an experienced business intermediary.
Business intermediaries, also known as business brokers, work closely with owners to help ensure that they are able to sell the business for maximum value. A business intermediary can help you navigate the complexities of the process and avoid any pitfalls that could stand in the way of a successful sale.