People look into selling their businesses for various reasons – it could be that they are retiring, want to venture into something new, the business is in financial trouble, or something completely different. But the fact remains that you are thinking about selling your company. If this is the route you are heading down, then there are some things to think about.
Know Your Market
How much you are selling your business for is not the same amount as what you have put into it over the years. Yes, you might be making a profit, but you are also likely to take a loss. Look at the business market and see whether now is really the right time for you to be selling – is your industry a hot buy at the moment, or are there a dozen similar companies that are selling for nothing? Get into a buyer’s mind and try and see your business from their point of view..
Results Over Potential
Buyers don’t buy for potential. You might think your business is about to break wide open, or that with just a bit more backing it will make millions, but all the buyer cares about is how much it will make them now. People buy a business to make a profit, not to have a new project. If they wanted potential, they would invest not buy. You need to prove that you have a valuable revenue stream and a good profit margin to attract a buyer.
It’s All About The Numbers
They also don’t care about your revenue – it you are making $50,000 a month, but your overall monthly profit is less than $5,000 it’s not the best deal. Where if you’re making $10,000 in revenue, and $9,000 of that is profit, then your business is a lot more desirable. Don’t let this put you off, just be aware that buyers want to know what they are getting out of the deal.
Live In The Now
If your business is in a rocky patch, but you are selling based on last years high profits, you’re not going to get anywhere. As previously said, buyers want to know what they can get now out of your business, and not what they could have got a year ago. You need to assess the value of your business based on the last twelve months. That might be great for you if in the last year your sales have been higher than ever before.
Honesty Is The Best Policy
Your mother told you it was, and we’re telling you it’s true. Don’t hide anything from a potential buyer – if you do it could come back around to bite you on the behind later on. If your company is in debt, tell them. If you are in partnership with another company, let them know. All these things might put some buyers off, but some might be interested because of these details – you never know what a person is really looking for.