Selling a business can be very emotional. It is natural for business owners to feel reticent about the loss or losing control of something that has probably been your life’s work. Something in fact as a business owner and entrepreneur that you have probably sweated over and nurtured like your own offspring. It is most likely very personal to you and if the truth be known, like a favourite car or house that you made your own, you would rather not have to let to go. And whatever the reason for the sale, whether it be a planned ‘exit’, a retirement necessary or forced on you through ill health, experience suggests it isn’t any easier.
Change is always difficult, personally. And as creatures of habit we don’t easily let go! For most people the experience of only ever buy or sell one business in their lifetime is enough!
But spare a thought for the buyer too. For him or her it is also a very difficult time. They are possibly embarking on their first business acquisition, most likely facing major change in their business (and personal) lives if the sale goes through, and likely struggling to unravel the complexities, personalised nature and special peculiarities of a business founded from scratch by a small business owner. A hundred times more complex than buying a house – and we all know what the average opinion of the estate agent to be!
Drawing on a couple of years of engaging with business owners (through business brokers) for buying existing businesses, there is some insight and a few pointers on the process that I would give from the buyers side. Obvious, you would say. But so often forgotten.
Sell the “Why”. The ‘simple’ rule is that buyers are buying the “why”, and not just the “what”. No different in fact to any sales transaction, big or small, something which most business owners will recognise whilst selling their own goods and services in their business. Buyers want to be sold the business, told “why” they should be interested, why it is a good fit for them. Many would say that they do this, but in my experience very few will ask the “why” questions. So food for thought!
Personalise the “Buying Experience”. Buyers want to see that the business will be easy for them to take over, that preparations have been put in place to make the transition smooth and painless, with a succession or transition plan in mind, or at least thought out in advance. Showing thought or interest about the transition, how it could work, suggestions possibly for how it could be tailored to meet the individual buyer, provides a ‘positive’ impression about the sale. It also ‘personalises’ the sale to the buyer, engaging them and making them feel the seller is thinking about their needs and the fit of the business for them, and not just after a quick sale. It may not be true, but buyers are fickle and impressions, first or otherwise, do count!
Be “open” with potential buyers. The reality is that buyers are generally not idiots, and are likely to see a cosmetic makeover or “spot an elephant in the room” from a mile off. But far from being unattractive, an “imperfect” business is often what makes a business attractive. The reality is that most new owners are looking for areas where they can bring value to a new business. Who wants to buy a “perfect” business anyway? It is far better to be open about the true state of the business, and play up the “positives” to a potential buyer, than try to conceal the truth. Nobody wants to buy from a dishonest Joe!
A golden rule in business is to think about an exit and ‘sellability’ as soon as you start running the business! Some pointers on what makes a business highly sellable are in this article.
And for anyone preparing for an exit or thinking of selling a business, feel free to in our take our ‘sellability test’ here online and we will get back to you with the results once analysed.
Comments and feedback welcome.