“If you want to sell what John Smith buys, see the world through John Smith’s eyes.”
There are lots of reasons you may want to sell your business. Maybe you’re a serial entrepreneur, ready for your next challenge. Maybe it’s time to turn the business over to your children. Maybe you just want to start over, and start enjoying life again.
Whatever your motivation, the smartest thing you can do once you decide to sell your business is to start thinking like a buyer. So let’s start there.
You’ve bought and sold a house before, so you know this intuitively: Buyers look at property differently from sellers.
Homebuyers want a picture-perfect house — no repairs, no roof leaks, no smells, no stains. Nothing to do but move in. If you want to compete with similar houses on the market, you’d better get to work — the sooner the better.
So you haul out clutter, repair leaky faucets, replace ugly floors, seal driveway cracks. And as you leave for settlement, you look around your spiffed-up house and mutter to yourself, “Why didn’t I do this years ago?”
Business buyers are like homebuyers. They like curb appeal.
The dirty concrete, scruffy plantings, old computers and metal office cabinets that have worked fine for you won’t fly for the new buyer. Prepare to spruce things up, inside and out, top to bottom.
And your buyer will want perfect financials, humming machinery, pristine inventory neatly stacked in an immaculate warehouse, no debt, no musty receivables, a state-of-the-art website and a world-class logo. The buyer will have his or her team of lawyers and accountants crawling all over your financials, looking for balanced accounts and up-to-date contracts.
You can be ready for them, if you start early. And there’s a bonus in store.
To do a good job preparing your business for sale means doing a good job of managing it in the meantime. It will gain equity, and may become such a well-oiled machine that you decide not to sell it.
Is this your go-to-work-every-day story? You walk through the scuffed front door, past the dusty plastic houseplants, onto the brown indoor-outdoor carpet, sit at your putty-colored World War II surplus metal desk and start your day.
That might seem normal, even frugal, to you; but to a buyer it will raise a red flag. Time to put on your “buyer’s glasses” and take the grand tour.
First, be an undercover customer at your store or facility. Walk through your warehouse. Pretend it’s the first time you’ve ever been there — or send a close friend to do it for you.
Make a purchase. Book an order. Search for a widget.
What do you see, hear and smell? What’s the general vibe? What impresses you? What annoys you?
How are you treated? How are the prices? Do the people seem pleasant and engaged?
Is the facility clean and attractive? Would you want to shop there regularly? Would you want to work there?
Next, be a customer on your website. Pretend you’ve never seen it before.
Does the design strike you as attractive? Can you find what you’re looking for? Is it easy to navigate?
Does it answer your questions? What pleases you? What frustrates you? Would you want to visit it often?
Now look at your financials with fresh eyes.
Negative cash, large line of credit, big debt jump out at you?
You may be used to looking at it, but a buyer won’t be.
Do you see a big bottom line? Are you thinking, “I could have fun with that?”
That’s exactly what you want your potential buyer to think.