Putting Yourself in Your Buyer’s Shoes When Selling a Business
When you are getting ready to sell your business, there is a lot to think about, and a lot of preparation that goes into the process. This is most likely the largest and most consequential transaction you have ever been involved in, so it is very important to plan properly and do everything possible to attract a good offer.
While there are a lot of necessary steps involved with selling a business, the process is made much easier with the right mindset. In a transaction like this, this means adopting the mindset of a buyer. If everything you do to prepare your business for the sale is done with the buyer in mind, you are far more likely to make a successful sale.
How to Think Like a Buyer When Selling Your Business: Of course, you love your business and your job as the seller is to try to make prospective buyers love your business as much as you do. Here are some ways to make your business more attractive to targeted prospects:
Make Your Business Salable: Think about what the buyer is after. A buyer wants a business that they can walk into and operate successfully from the get-go. For starters, a buyer will be looking for positive cash flow. Hopefully, your business is profitable enough for them to enjoy a good standard of living as its owner. In addition, they will want to know that you are on an upward trajectory with the potential for strong growth in the future.
Take an honest look at the current state of your business. Are there any glaring weaknesses that need to be addressed? For example, are there technological upgrades that should be made in order to stay competitive in the marketplace? Do you have a solid marketing plan in place, or are there opportunities for improvement in this area? Do you have a wide customer base? Or are you overly dependent on a handful of high-value clients?
Examine these and other areas of your business and identify any realistic steps you can take to make it stronger. Similarly, to home buyers, most business buyers are not looking for “fixer uppers”. They want a business that will be relatively easy to maintain and grow as long as it is managed properly.
Make Yourself Dispensable: One common issue that many businesses have is being overly dependent on the owner. Ask yourself, what would happen to your business today if you were no longer involved in it? Could it survive without you? Are there strong enough processes in place that another owner could plug into it and continue successful operations? If not, this would be a red flag for prospective buyers. Part of your sale preparation should be to solidify your processes and transfer as much of your responsibilities as possible to others within your company.
Be Transparent: Every serious buyer will be performing their due diligence. They will want to see organized financial statements, and they will want to know about any potential issues that they may have to deal with. Be upfront and transparent with prospective buyers, and make it is easy as possible for them to understand everything they need to know about your business.
Be Flexible: Some of the prospects that could be a good fit to take over your business might have limited capital and the inability to access conventional financing for the entire purchase. If you are able/willing to provide at least partial owner financing, this opens up a wider pool of potential buyers for your business.
Another thing that could be helpful in closing the sale is the willingness to stay involved for a period of time to help ensure a smooth transition to new ownership. For example, if you are still part of the company even in a consulting role, this can be reassuring to employees and key clients. If you are able to stay on with the business for a while, this is definitely something you should consider.
Work with a Local Business Intermediary: There is a lot that goes into selling a business, and as you prepare for this process, it is wise to partner with a professional business intermediary. Also known as business brokers, business intermediaries work closely with sellers to help them navigate the complexities of the transaction and put them in the best possible position for a successful sale.
Business intermediaries also have a lot of experience working with all types of buyers, and they have an in-depth understanding of how a buyer thinks. By working with a reputable business intermediary, they can put their extensive experience to work for you and help you approach the sale from a buyer’s point of view.