According to articles in Forbes Magazine and data from Exit Planning Institute and BizBuySell, 70% to 90% of businesses that go on the market don’t sell. While the earnings are significant, business buyers consider several other factors as well. This is one more article in our series dedicated to helping business owners sell a business for the best price.
We all know we can’t keep our businesses forever. At some point, business owners look at different options. Some just close up their businesses. Some turn their companies over the employees. Still, others transfer the business to a family member.
But many business owners prefer to sell their business to an outside buyer.
Three similar businesses earning similar gross sales and net profit might be judged very differently by the marketplace. One might sell at a high price, another might sell at a low price, and the third might never sell. Revenues and profit are significant, but other factors significantly influence the way buyers and investors look at business acquisition.
Here are nine key transferability factors that affect business buyer decisions
- Business Brand Value – the success of the business should stand on its own and not directly tied to the owner
- Systems and processes – are the systems and processes recorded in a way that a new owner could easily understand and implement what makes the business successful
- Key employees – almost everyone owner wants the key employees to stick around; create incentive tools so that the employees will stay with the new owner
- Business culture – solidify the way your company and its employees interact with customers and each other. Define and implement your mission and core value
- Customers – make sure your customers are connected to your business – not to you personally
- Concentration of customers – a large percentage of sales coming from one or a few customers makes most investors nervous. Add a diverse array of people doing business with your company
- Keep growing – keep running your business like you’re in the long game. Investors look for stable or increasing sales and shy away from ones that are declining – no matter the reason you give
- Present a great, powerful image – Give your business, in-person and online, a fresh, exciting look. Invest in looking sharp. Impressions impact business buyers
- Be organized – Investors crave supporting documentation and run away when the books are records are unclear or not available
Would you like to learn more about how to sell your privately-owned business for the best price confidentially?
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