15 May Selling Your Business in Tough Economic Times
If you want to sell a car and you spend five dollars to wash and polish it and then apply a little extra elbow grease, suddenly you find you can charge an extra four hundred dollars.
Perhaps the first question one could ask – “How do you manage your business to ensure that you come out on top?” The world today is one of constant change. Never before have there been so many variables to consider and left field challenges faced. In the maze of business how does one ensure that you have a greater possibility of going up the ladders than sliding down the snakes to financial lack?
Is there ever a perfect time to sell? In short no! In bullish markets there is more competition, greater demands and higher expectations. In bear markets there is a negative environment, more scrutiny and anguish around finance and long run results. However there are some key pointers that business owners can focus on to sell their companies at the best market price. There are factors that when applied will add that extra shine to the business and realise a better than average return on investment.
- Create a positive image
Spruce up the business. From the outside in – make it presentable. Get into the buyer’s frame of mind. When someone arrives at your business what do they see? Is the business growing? Are the outcomes positive? What is its position in the industry? How much market share does it command? As a business owner one should spend to ensure there is continued growth in products, versatility, customers, and returns. - Build strong foundations
Take advantage of agreements, associations and joint ventures – both on the sales and supply side. Watch for seasonality. Utilize assets, alliances and other proprietary advantages in other areas in seasonal down times. A business that has strong provable relationships will always sell for more. - Develop the team
Develop good business management. Starting with the management team, lead and develop loyal employees that will transfer with the sale. Ensure appropriate delegation and contingency plans are in place. A business hinged around one person – the owner – heads for the doldrums every time. Sellers must accept lower valuations for lack of management depth, regional versus national distribution and reliance on just a few customers. - Add depth to the Products and Services
Single products or services become liabilities. They detract from the value. Buyers are wary of taking on a business that is all too dependent on limited options. Develop additional or companion products that are not in competition with the primary product or service. - Put reliable systems and procedures in place
This demonstrates the muscle of the organisation. Well structured, thorough documentation and well managed finances always win the day. The more provable and reliable the systems and details the greater the value of the business. - Prepare a Growth Plan
Draw up a detailed growth plan for at least the next two years. Show market options and the alternatives available to the business. This will give the buyer peace of mind and will provide enthusiasm for the purchase. - Get your Financials ready for Presentation
A thorough financial history along with detailed expense analysis is a must. The more complete this is the easier it will be to prepare a realistic market approach. Sound financials pave the way for an easy transition and ease the buyer’s tension. Having detailed numbers also allows the seller to stand their ground when the price is being negotiated.
A sound business that presents well across all levels will sell for good returns in any market. This will be true especially in tough economic times, when most competitors are too involved in their businesses to see the reality of their offering. Buyers are looking for financial gain and improved lifestyles. As we do when we buy that car – we visualise what it can do for us and what it will be like driving off into the sunset. Nobody wants to drive off in a wreck.
A qualified Business Broker can assist you to prepare your business for the sale. The Business broker will be able to guide you through all these steps in detail, anticipating the pitfalls and making the most of the positives. Selling a Business is more than selling a functional company, it is achieving the best outcome for both the seller and the buyer. It is always better to have a professional Broker in your corner to assist. The Broker will be able to add that extra bit of elbow grease.