Do you have a manager that can take over operations of your business or provide a new buyer significant assistance? Is there a key employee to help the new owner run the business? The quality and depth of your employees is a tremendous asset for your business. Good employees enhance business value.
2) Books & Records:
Your accounting should be in proper order. The quality of the books go a long way to provide comfort to the buyers that there is something substantial to buy, and you are being open and honest in the portrayal of these records. All these elements help the buyer understand exactly what your business does and how it gets done.
3) Competitive Advantage:
Why do customers do business with you? Do you have some special intellectual property? Special customer relationships? Unique location? Special permits or license? Being able to describe why you’re different and why someone would want to buy your company to gain that edge can be important.
You’ve been successful in your business because you change with the times. Right now business values are down and a big part of the reason is financing through banks isn’t available. Seller financing will help you maximize the value of your business when you go to sell. You can also sell faster with seller financing.
5) Customer Diversity:
Having a broad selection of customers makes potential buyers comfortable with your revenue future. Too much of the sales, like 25% with a single customer is a warning sign to many buyers. Diversify your customer base to reduce risk.
6) Product Diversity:
Similarly, if you are a one product company, there is significant risk if something happens to reduce sales of that product. Having multiple products that appeal to the same customer base provides a lower risk profile.
7) Profit Pipeline:
Let’s face it, someone wants to buy your business because it’s profitable. In fact, it’s more important to grow profits than sales. Show the careful attention you’ve taken to improve profitability in terms of product mix, cost controls and marketing promotions.
8) Keep your eye on the ball:
Once you’ve decided to sell your business it’s only natural that your mind drifts away to life after your business. Resist the temptation. Although difficult, you must continue to focus on running your business while your business broker focuses on selling your business.
9) Professional Team:
Make sure your advisors are on board. Your attorney and accountant will be involved in the sale of your business, so make sure you make them aware of your intent. They will want to shine for the new buyer in the hopes of getting a client to replace the one they lose when you sell the business.
10) Growth Plans:
Most buyers want to know what the seller would do to improve the business if they weren’t so bogged down with the day to day work of running the business. Your experience and drive will help direct the buyer in thinking of ways to improve your business. By helping to pencil out some potential future directions, you’ll be helping the buyer to visualize how to take the good thing that you’ve built, and make it even better.
Today buyers are consumed with managing risk. You can maximize the value of your business by doing things that help the buyer perceive less risk. Well documented processes, long customer relationships, stable employee base, good books and records and long profitable track record will all help the buyer focus on the opportunity, and not the risk of your business.
Erik Ottem is a business broker in Silicon Valley. He is a certified business intermediary and holds a master of business administration from Washington University in St. Louis.
To find out more about businesses for sale or to sell your business go to: http://www.VRsiliconVALLEY.com
To get more articles on buying or selling a business go to: http://www.CenterForBusinessSale.com