How sellable is your business?
Have you ever considered selling your business? Business owners choose to sell their business to an outside investor more than any other exit strategy.
However, Forbes Magazine, Exit Planning Institute, and BizBuySell share that most businesses that go on the market don’t sell for years, if at all.
Revenues and profits are significant to Buyers. However, other factors heavily influence the way Buyers look at business acquisition. Since 80% of the businesses that go the market do not sell, there is good reason to consider what makes a business sellable carefully.
Many future entrepreneurs realize that an existing business can provide immediate cash flow, customers, and peace-of-mind. In contrast, a start-up business and a franchise start-up business can take years to become profitable – if at all.
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 much lower price, and the third might never sell at all.
Here are ten key factors that influence business buying 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 so that a new owner could easily understand and implement what makes the business successful.
- Key employees – almost every new 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. Do your marketing research and get your marketing plan going.
- Growing Revenues – 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.
- Powerful image – Give your business, in-person and online, a fresh, exciting look. Invest in looking sharp. Impressions impact business buyers.
- Organization– Investors crave supporting documentation and run away when the books are records are unclear or not available. Get your taxes, QuickBooks, etc. in order now.
- Financeable – If you are not interested in providing Seller Financing, then get your business SBA pre-qualified. Whatever your price is, there are always more people with 20% of some price than the total asking price. SBA loans can make a big difference.
How sellable is your business? Think about your business from the perspective of a prospective Buyer. Even if they have strong industry knowledge, your business is unique. Buyers need to know that they can take over your business and be successful.
Check out more articles on how to sell a business successfully and how to buy a business successfully at BuyBizUSA.com.
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