Not all businesses for sale are the same, some share common factors that help them stand out in the eyes of a buyer. If you’re ready to sell your business, than the following discussion is a great place to start to help you address key value drivers for business buyers in your own business.
INDUSTRY. We all know trends come and go and the same is true for small businesses. Each year there’s a trendy new business concept from frozen yogurt, to pottery painting and beyond. If your business is within a current up and coming industry, it has a pretty good value proposition for a buyer already. If it’s in a trending down industry it will be more important that you have other value adds in place, and that you can show opportunities for growth pertaining to your business.
PROFITABILITY. Business acquisitions can be made for both strategic and financial reasons. Some buyers are looking to buy a business for its assets, location, or resources, while others are looking to purchase a business that can provide them with good cash flow. Depending on who the most probable buyer for your business is, it will be important to show reliable or growing cash flow, recurring revenue opportunities, or alternatively the key resources a buyer can utilize.
RECORDS. When you have guests over, presenting them with a clean home is par for the course and the same goes for your small business. Keeping clean and well organized books and records will prove to the buyer what kind of standing the business is in. This clean record keeping should include financial statements, balance sheets, profit & loss statements, tax records, contracts, and any other documentation pertinent to your business. The more well documented your business is the easier a buyer can envision themselves stepping in to it.
OWNERSHIP. If your business is called “Marc’s Landscaping,” it is going to be difficult for a buyer to imagine the business operating well without the owner, Marc. Removing yourself from daily operations, is a great way to add value to your business and make it attractive to buyers. This may require hiring a manager, or documenting more processes, but it is important to help your business sell quickly. The more ways a buyer can see that the business can operate without its current owner, the more set up for success a buyer is when they acquire it.
PROCESSES. Business buyers are often attracted to franchises because they already have well documented systems and processes in place to run the business. So why not build that value add into your own small business? Documenting everything from employee manuals to sales scripts, and production requirements, will go a long way in ensuring proper knowledge transfer to a new owner.
Addressing key value drivers within your small business is a great way to make it more attractive to business buyers. To learn more about selling a business with Transworld Business Advisors, we invite you to schedule a free consultation with one of our brokers, or visit our website for more information.
Rachael Holstein has been the Marketing Manager for Transworld - Rocky Mountain since 2016. Her work experience has been largely focused on business development and marketing in business brokerage, finance, architecture, property management, and information technology. A long time resident of Cleveland, Ohio, she attained her undergrad from John Carroll University and her Master’s Degree from Cleveland State University. In 2013, she relocated to Denver with her husband, Joe, and her furry companions to explore the mile high lifestyle!