When it comes to selling your business, you have many options. You may decide that the time is right for a different challenge and perhaps want to focus on other areas of your life, or maybe one day in the not-so-distant future someone will offer what you desire most: financial certainty.
Regardless of why you want to sell, you want to be sure to be as ready as you possibly can be. There are many ways to increase the value of your small business prior to selling. In this blog post, we will look at how you can set up your business to be more attractive to future buyers which you may not have considered previously.
One of the most important aspects of preparing for a sale is knowing what you want out of it. Do you want to sell everything and start fresh with a new company? Or would you rather keep certain assets like the name or logo? Knowing how much control over the sale process you are comfortable giving up is crucial to your success in selling your small business.
So if you are thinking about selling your business today, tomorrow, next year, or sometime down the road, and you want to increase the odds of a successful sale, please keep reading!
And remember the golden rule, the earlier you start, the better off you will be!!
Clean up your online presence by removing any outdated or irrelevant information
Whether you do business online or not, it is important to keep your online presence clean. This goes for all social media platforms including Facebook, Instagram, and Twitter.
Sadly, we have seen very profitable businesses list on Otonomy.ca which have been running successfully for many years but have neglected the website they created back when Netscape was a thing. Because their website is non-revenue generating, they don’t believe it applies to the valuation of their business.
It can be difficult to maintain a well-rounded online presence on these sites with the amount of time they can take up in our daily lives so it’s best to have someone who can handle these aspects if it is not in your wheelhouse.
The most expensive part of building an online presence is your time. If you spend hours a day managing your social media, blog posts, and other online marketing efforts then you are not using that time to grow your business. Don’t hesitate to hire help. It may not be as expensive as you think.
If you are actively online for your business, it is important to remove outdated or irrelevant posts from all of your platforms on a regular basis so that you are always presenting the best version of your business. Maybe it’s time to take down that blog post from 1999 about how Y2K will end us all.
For a few hundred dollars, you can have a local webmaster refresh your business website with a new design and update the code to make it easier for search engines to index your web pages. Of course, it all depends on how much you want from your website. The bigger the needs, the greater the cost.
You should also consider having an SEO audit done on your online presence by someone who knows what they are doing. This efficient way of finding ways that you can improve how well your company is found online will be noticed by today’s qualified buyers.
If you are selling a brick & mortar shop, be sure to set up (or have someone set up) your Google My Business. It’s free and is effective on how you can engage with your customer base.
Guaranteed however, anyone looking to purchase your business has spent a significant amount of time looking at, reviewing, scrutinizing, and yes, judging you, by how you present yourself digitally. Creating a website that is easy to navigate and has all the necessary information about your company will help make the sale of your business easier. Or at least give buyers the warm fuzzies to continue looking.
Update your business’s logo to reflect its current branding and look
When was the last time you looked at your brand? Have you given much thought to what your brand represents? Many businesses have a brand book, and it should be referenced often to keep up consistency. Keeping up-to-date on trends in graphic design will help you better understand how you can best use this tool for your business.
For those who have been in business for a long time, your brand may be outdated and not reflect the current business. A logo that is out-of-date can misrepresent your company, which may inadvertently prevent potential buyers from considering the purchase of your company.
It’s fair to say, however, that some buyers may be looking for the opportunity to rebrand an existing company. They may be looking for that ‘diamond in the rough’ which they can put their polish on and update. However, this comes at the expense of how much you can ask for your business. So be aware, if you intend to keep the pixilated logo that you made in MS Paint in 1987, lean into how new owners can put their spin on an existing business. This may actually help in the sale but may impact your asking price. Take a look at the (brilliant) Otonomy article; “How To Get Your Business For Sale Listing Noticed” which dives into buyer motivations and how to use that to your advantage.
When it comes to your business brand, you need to be careful if YOU are the face of your business. If your name, beautiful face, and sparkling personality are attached to everything your business stands for, how difficult will it be for the new owners to differentiate themselves when they take over? If you are the face of everything, are you willing to include that into the sale of the business?
A local photography store recently listed and sold which was named after the owner. He was also the principal photographer. The new owners wanted not only the store but the reputation that came with his name. He elected to sell them both, the store and his name. So, it is possible but be sure you know how much of the brand is you and you are the brand before going into negotiations with potential buyers.
Who doesn’t love writing documentation, right? If your goal is to reduce buyer objections (and it is) you will want to have this done. This can’t be stressed enough.
By documenting everything, you are signaling to the buyer that you have taken care of all the tasks and that there is nothing left to do but close.
Identify all your processes and create a standard operating procedure (SOP) for each one. This will not only help the next owner but will help ensure that every process is being followed correctly for your daily operations.
Include how-to’s, product listings, pricing structures, etc., and get it into a searchable format (think Google Docs or Word). The more thorough you can be the better. From the process for onboarding new hires, to how you plan and execute marketing events and customer correspondence. Remember, this exercise is about giving buyers more reasons to feel buying your business will be easy, not to remind them of the work they will need to do once they take over.
If you don’t know how, ask someone who might be able to help or hire an intern! They will appreciate the experience to expand their knowledge of your operations and perhaps get valuable practice in technical writing.
For the most part, you will need all your documentation and processes detailed so that any future buyer can pick up where you left off with ease. Many small business owners offer training to new owners with a delayed transition plan. Doing the work upfront will save you time on the backend as well.
Build a strong team
Whether you plan on selling your business or not, building the right team is a huge part of any business.
One of the many advantages to having a strong team is their ability to take on more responsibilities, making them better equipped to answer questions and handle the operations when you are not around.
When it comes to selling your business, this becomes critical as a core part of your strategy. The next owner will be looking at the roles your team will play during the transition and beyond the handover phase. New owners are not looking to inherit the people resource issues you may be experiencing. And while it’s possible that a buyer may want to ‘clean house’, more often than not, the desire is to have as little disruption as possible as they take over your business.
One of the best ways to build and maintain a strong team is by offering incentives for employees who are transitioning with you or staying on board when new ownership takes over. These can be in the form of cash, stock options, bonuses, or other benefits that will keep them engaged while maintaining their productivity before you go.
However, nothing beats creating an atmosphere where employees feel valued and work hard to help make your business successful.
Knowing what you want
One of the most difficult things about transitioning a small business is not fully knowing what you want out of the sale. To avoid making an emotional decision, it’s best to plan ahead by writing down all that you hope for in a transition including how much time you will need (or not) to spend with the new owners.
If this is purely a financial transaction, what would that look like for you to accept the deal? Quite often, there are a variety of factors for selling a small business. For example, as the owner, you may want to sell because you are looking for a reduced workload. In this case, you may strike an agreement that would allow you to participate in the transition of the business for a longer period of time in a consulting or supportive capacity which may have a direct impact on the asking price or how the deal is financially structured.
Many small business owners start the sale of their business for one reason but eventually realize their reason for selling is completely different. For example, they sell their business because the idea of retirement is enticing. However, they soon realize that the new owners do not share the same values and goals as they do. Arriving at the conclusion that they are not just selling their business but their legacy, the deal falls through in the end.
When it comes time to sell, you should also be aware of what you do not want. You need to be prepared to walk away from any deal but know why you are walking away. If you went through the exercise of documenting what your needs are, you’ll have fewer sleepless nights during the selling process.
As for a successful negotiation, understanding what the buyer wants will pay off greatly. If you take the time to truly understand the buyer’s needs, you’ll know what features to raise and highlight in the negotiation process.
You’ve done the hard work to build your business. Now it’s time to capitalize on all that effort by selling it for what is going to make you happy (remember, it may not all be about the money). If you want buyers to say yes, there are plenty of things you can do- and we mean really do- in advance that will make them more likely to want what they see when they come asking about your company. Clean up your digital presence so potential buyers know where to find information about you online. Their first impression may be about what they learn online whether you do commerce here or not. Make sure every aspect of the brand is consistent with who you are as an owner and what your business represents (including logo, website design, etc.). Document all processes or procedures so future owners have few questions about how things get done at your company. And last but not least, be sure to know what you want out of the sale before meeting with potential buyers.
Sometimes it all comes down to the negotiation. The more you know about yourself and the needs of the buyer, the better equipped you will be to have a much smoother transaction and easier transition.
And of course, when you’re ready to sell, Otonomy.ca is here for you. Whether you are using a selling agent or selling on your own, enjoy the first 30 days of your listing at no cost so you can see how everything works.