If you’ve decided that you are ready to sell your business, before you get it listed, it’s important to know why some businesses sell, but most do not. Industry experts report that only about 1 in 4 businesses on the market today will see a successful sale. Unfortunately, the other 75% of the businesses will either remain on the market indefinitely or they will fail to sell altogether.
At Green & Co. Business Brokers, we sell 82% of the businesses we list for sale. That is a marked difference from the average statistics. So, how have we cracked the code? We think it’s pretty simple. We focus on 3 key characteristics, which will make our listings among the 25% that sell, rather than just another “seventy-five percenter” as we call them.
These three keys are: a sellable business, good marketing, and the right asking price.
Key Number 1: A Sellable Business
Buyers are looking for a business that they can easily step into and start running on day one. Could a buyer do that with your business? If not, you need to take the steps now to ensure that your business is sellable. If your business relies heavily on you to operate, you need to make some changes ASAP. Make sure that all of your processes and procedures are well documented, responsibilities are delegated to managers or key employees, employees are trained and knowledgeable in everything that is needed to maintain the running of the business, and ensure that all records and financial documents are current and kept up to date. Make sure that you have a very clear idea of what is being sold as part of the business. Simply having tangible assets like equipment or intangible assets like a customer list, just won’t cut it. In order to compete with all of the other businesses for sale, your business needs to be able to stand on its own two feet and outshine the competition as a complete package. Ultimately a business is sellable if it’s a business that buyers want to buy, so you want to make your business as appealing to a buyer as possible.
Key Number 2: Good Marketing
This one seems like a no-brainer, but you would be AMAZED at the horrible marketing job many business brokers are doing for their business listings. Because we work with buyers to purchase businesses that other brokers have listed for sale, we see this unfortunate marketing first-hand. That is one area that really sets Green & Co. apart from the competition. Not only is our front-line marketing top-notch (we get the buyers interested in the business with our confidential advertising and our video marketing), once we have a buyer interested, they have been pre-qualified, and they have signed a Non-Disclosure Agreement, they receive a beautiful professionally designed digital brochure highlighting all of the aspects of the business for sale. Normally what buyers get from business brokers at this stage are a few scraps of paper, like a photocopied P&L from a few years ago and maybe, if they are lucky, an equipment list. There is usually nothing given to the buyer at this point that is working on actually selling the business to them. We see this as the most important opportunity to sell the business to the prospective buyer. No matter how good of a match this business is for the buyer, if it is presented in a clean, complete, informational package, there is more of a chance that they will consider it as a serious option. We have a captive audience at this moment, so it’s the perfect time to put the business’s best foot forward. That starts with a great buyer package.
Key Number 3: The Right Asking Price
We can attract as many buyers as possible to a listing, but if the numbers don’t make sense, and they can’t justify the asking price, buyers will just disregard it as another overpriced listing. Most buyers are interested in one thing: owner benefit (or seller’s discretionary earnings). They want to see the bottom line…what they will be taking home after all of the business’s expenses are paid. They then will be looking at the owner benefit, and comparing it to the asking price. Buyers need to immediately be able to see the value in the asking price. If the return on investment or ROI is favorable, then the asking price will make sense to a buyer. The majority of buyers aren’t buying based off of emotions, they are looking at buying a business for investment purposes. They will be looking at the numbers very closely, and if at first glance, the asking price seems too high compared to the owner benefit, then they will most likely move on to another opportunity that makes more financial sense. That’s why it’s of the upmost importance to get the asking price right in the very beginning, because that’s when the most eyes will be checking out the listing, and we will have the best chance of snagging the right buyer.
If you are thinking about selling your business, let us help you be one of the 25% who sells. Give us a call or drop us an email today.