Selling a business is so vastly different than selling any other asset you own, mainly because a small business is more than just an income producing asset – it is a lifestyle as well. You can’t just “renovate” a business like you can a house in a short space of time. It can take years to renovate a business that in the end, may not even sell.
Therefore, the process of selling may be fraught with a great deal emotion, so it’s important to weigh up the personal ambitions against economic consequences to make the decision of when you want to part with your business. It’s also important to acknowledge that the sale price of your business will never be 100% predictable.
With over a decade working with buyers and sellers, I have found that the businesses that sell quickly and within 10% of the asking price, are those that are attractive.
My business attractiveness index includes (but is not limited to) a business that:
- operates in a defined market;
- is systemised and process-driven;
- has a strong marketing position;
- can operate without the owner;
- has solid cashflow;
- is situated in a prime location;
- has minimal employees;
- has a client/customer database of detail and magnitude to quantify financial, emotional, economic, environment and personal risk to a buyer;
- is not selling under duress or distress;
- the seller has a concept of the market, a history of profit, a willingness to understand risk and negotiate.
In other words, an attractive business is one that the seller has intelligently and carefully planned the decision to sell because the business is ready and attractive to a buyer – not because of a sudden personal situation, frustration or short-term downturn in trade.
With these factors in mind, ask yourself “is your business attractive”, and if not, what can you do over the coming year or so to create an attractive opportunity for a buyer.
It’s time… Go for it!