Believe it or not, we frequently have buyers stop into the office and say, "I have cash and would like to buy a business, what do you have available?" It's surprising to think that someone would want to buy a business and have no idea what they wanted to buy, but it certainly happens. Why is that?
Many buyers shopping today have owned small to medium sized businesses before and have been successful at growing them and increasing profitability. With that in mind, actively looking buyers have a few checkpoints on their list that makes a business attractive - a combination of business qualities, marketability, and assets
- Established Revenue: A business that has traction in the marketplace and an ability to grow is very attractive to buyers.
- Owner Engagement: There are buyers out there who want to go all in and physically manage the business 40 to 50 hours per week. However, that is not as common. Typically, buyers want to buy a business where the owner is indispensable. Could the business survive without the owner's daily presence? These savvy buyers want to know the earnings from their investment will be there with or without their daily presence.
- Stability in Ever Changing Markets: As we all know markets are like tides, business grows and business recedes. Those businesses that prove to be more seaworthy and show stability?seem to attract more interested buyers.
- Reputation: A reputation can make or break a business. Buyers don't like uncertainty and a strong reputation within the industry or community are very important.
- Niche Business versus Franchise: This is where one potential buyer could be completely different from the next. Niche businesses many times have the revenues that meet the ROI expectations right out of the gate. They offer an ability to lead the market in their segment, have limited competition and can have increasing demand for their products or services. All of that said, there are also those buyers in the marketplace who want a proven business model with a track record of performance, great branding/marketing, a recognized name and a structured business platform. That is where a franchise enterprise is a perfect fit and there are a wide variety of fantastic options there.
When you are ready to list your business for sale, remember that buyers like to window shop and don't always have their minds made up on what they want to buy. Therefore think about how you are going to differentiate yourself from the rest of the pack and make your business the obvious choice to buyers.
Chris Cantwell is a business broker with Transworld Business Advisors of Denver. Chris brings 20 years of small business experience to Transworld. While Chris is diverse in working with all industries at Transworld, restaurants, hospitality and franchises are areas of added expertise. If you are interested in buying or selling a business contact Chris today!