How to Sell Your Business Without Selling Yourself ShortVirTasktic
Running a small business is one thing. Selling it is something else entirely.
Sadly, far too many business owners who are fantastic at running their businesses do a terrible job of selling them when that time comes. And the result is a much lower return on their years of financial, physical, and emotional investment in their enterprise.
So what are the basic keys to selling your business without selling yourself short?
Plan for the Sale Well in Advance
Take a lesson from those serial entrepreneurs and angel investors you see judging the business ideas in Shark Tank. These guys always have a concrete exit plan established before they even sign on the dotted line and get involved with a business concept.
Granted, most small business owners aren’t going into business for the express purpose of selling out and moving on to the next big thing. Most of us start and build our businesses so we can support our families, because we enjoy what we’re doing, and as a labor of love. But the reality is that – unless you plan to pass a family business down to the next generation – you’re going to need to sell at some point.
Scott Williams, owner of Lawn Master, a family-owned business in Pensacola, FL, says: “Honestly, I don’t see any interest in taking the company over in the next generation. My kids and their cousins are all pursuing their own careers, and that’s fine. Making a success of business requires passion and a love of the job. If you’re forced into it, that passion just isn’t going to be there. There’s still time, but we need to be prepared for the possibility that we’ll one day need to sell Lawn Master to someone outside the family.”
So, start planning now for whenever that time comes. Maybe it’s 40 years away; if so, it’s still wise to pay attention now. Start thinking ahead (with the help of an accountant and lawyer) to figure out how much you’ll need to get from the sale in order for your investment of time, effort, and resources to provide a solid return. Then, you’ll know what steps you need to take now to ensure that number is the minimum you earn from the sale when it goes down.
Keep Records Religiously
“Doing the books” is a lot of small business owners’ least favorite part of the job. But, from the standpoint of a profitable sale, it’s one of the most important things you can be doing.
You see, when prospective buyers look at your business, they’re not going to be able to appreciate the fact that you built it with your bare hands, that you survived the Great Recession against all odds, or that your very first customer from 1982 still comes in every week. What they can appreciate, though, is what’s in black-and-white on your income statements and balance sheets.[Tweet “Don’t #sell yourself short. 3 ways to make a profitable sale on your #business.”]
They can appreciate the fact that your hard work and your staff’s customer service skills have resulted in a business that consistently makes a profit month after month, year after year.
And that fact is going to sway their decision far more effectively than all the great stories you have to tell.
Pay Attention to How Things Look
While what’s in the books will usually end up making a buyer’s decision for them, how your place of business looks and feels could prevent them from even glancing at the books.
It’s called curbside appeal, and you’ve experienced it yourself if you’ve ever gone house hunting: You read an ad in the paper or online and think you’ve found the perfect house for your family. But then, you drive up to the address and find the yard is a mess, one of the windows is broken, the front steps are rotted, and there’s trash everywhere.
No matter how nice the house sounded in the ad, not even one person in a million is going to make an appointment to see the inside of a house like that. And even that rare breed who has enough imagination to see its potential would never pay top dollar for that dump.
Similarly, while your business may be profitable and sound great to a prospective buyer who reads about it online, if your premises are shabby, unkempt, and in need of repair, you may never even know they were interested. They’ll walk in and walk right back out shaking their head.
It’s better for business anyway since clean and tidy surroundings provide a more productive environment for employees and a more pleasant experience for customers. But if you’re looking to sell, it’s even more important.
Of course, there are plenty of other important details a small business owner will need to consider when it’s actually time to put their business on the market. But these three, simple tips will ensure that the journey from “business as usual” to “business sold” is a short and painless one.
Bruce Hakutizwi is the U.S. and international manager of BusinessesForSale.com, a global online marketplace for buying and selling small- and medium-sized businesses. With more than 60,000 business listings, it attracts 1.4 million buyers every month. You can connect with him on LinkedIn