Often times when a business owner decides it’s time to sell his or her company, revenues are on the decline.
If your business is upside down because debts exceed assets, then all that can really be sold are business assets since there is no positive cash flow. Selling a business under these conditions puts the owner in the worst possible position for earning a return on years of hard work.
As a former marketing manager for a business brokerage firm, I often heard stories about business owners who struggled with the challenge of positioning their business for sale. Many of these owners had invested years into their business only to find themselves needing to sell the business. As business declines, they often made cost-cutting decisions in hopes of recovering, and some of those cuts included reducing or eliminating their marketing efforts. The difficult reality for these business owners to accept is that they really don’t have as much to offer to a potential buyer as they believe.
Sell Your Business Like You Sell Your Home
It would be helpful if the business owner looked at their business from the perspective of the buyer. Exactly what is the buyer purchasing: a business with cash flow, strong customer base, and a return on their investment, or little to no cash flow, business assets, and a lot of accounts receivable? Thoughtfully planned and executed marketing that develops a recognizable brand and a professional image positions a business so that when the time comes, it can be sold for top dollar. To demonstrate this concept, let’s compare the purchase of a business to the purchase of a home.
Think Like a Buyer
Put yourself in the shoes of a homebuyer for a few minutes and imagine looking for a three-bedroom, two-bath home in Maine. As a buyer in a competitive market, you want a home that meets your needs and offers the best value (ROI) over the long term. As you peruse the online listings, you notice the differences in the quality and price of the homes offered. In the same neighborhood, there are two listings for similar style and age homes. The first home appears to be well maintained and updated, professionally staged and photographed with an online virtual tour. The second home appears to need decorating and updating; the snapshot photos show a cluttered interior and minimal preparation for sale. Even though these homes are very similar, which home would you be most likely to offer the higher price?
With a fresh coat of paint, updating and staging, the second home would be much more appealing and be better positioned to sell quickly at the highest price. Professional investors who understand the real estate market and construction will buy the second home at the lowest price possible, do the cosmetics and repairs needed and sell at a higher price for a profit. The same theory applies to selling your business.
Position Your Business for a Profitable Sale
Rather than selling your business at a loss, do what is needed to make your business attractive to potential buyers. Positioning your business for sale by developing a strong brand identity, marketing collateral and online presence will offer a better return on your investment when it comes time to sell. Keep in mind that buyers want a turn-key business when purchasing so they can focus on ownership transition, operations and immediate cash flow. Some tips for preparing your business for sale are:
· Marketing Strategy Develop a workable strategy that can be rolled out over time and within a reasonable budget.
· Logo/Brand Image Develop A contemporary, professionally designed logo for quick recognition by current and potential customers. The logo will be used in a multitude of marketing venues and will, over time, develop brand equity which has a price tag.
· Website Review your website, (if you have one), to make sure it looks contemporary, contains current content and is connected to social media outlets. Your potential clients will want to know who they may do business with so create a positive, professional online presence and keep the site current through use of a content management system.
· Social Media/Digital Marketing If your company isn’t involved with social media or online marketing now is the time to start. Online news sources are a great way to get the word out on your company, develop long lasting relationships and do it cost effectively.
· Marketing All marketing materials and customer touch points should have your logo and message clearly shown. This includes business cards, brochures, sell sheets, email campaigns, personal email signatures, e-letterhead, and signage, to name a few.
· Consistency Whatever strategy is developed to improve your company’s image, be committed to being consistent about marketing your business—every day, every week, every month. Consistency on a small budget is far better than inconsistency on a large budget.
Implementing these key points will go a long way to positioning your business for sale and getting the best price possible.
Alexandra Heseltine, President of GCMD web design + branding + marketing, has over twenty years of design and marketing experience working primarily with established small to mid-sized businesses. Her background includes commercial and residential construction, commercial banking, corporate law, real estate, non-profits and related industries. See www.GCMD.Agency for more information.