So, you have decided to sell a small business. You can already congratulate yourself – treating your own business not as an integral part of your life, but as a highly liquid asset with a certain value is a characteristic feature of a mature owner, a real capitalist, in the good sense of the word.
If we are talking about a large business, the transaction will most likely involve qualified and highly paid experts - lawyers, financiers, appraisers. And the owners of such enterprises have most likely already carried out similar transactions more than once - they already have the necessary experience. It is a completely different matter when a small enterprise is being sold.
Often, such a transaction is almost the first in the life of the seller, which means that there is a high probability that he will make a mistake, receiving for his asset an amount much less than its real market value. Our many years of experience in consulting activities allows us to formulate a number of simple recommendations that will help avoid the most frequently repeated mistakes and miscalculations when selling small and medium-sized businesses.
Unfortunately, there are very frequent situations when a business owner, while mentally aware of the necessity and timeliness of selling it, cannot internally come to terms with the fact that any day now his enterprise will no longer belong to him.
Subconsciously, such a seller resists the upcoming sale, cannot force himself to start actively preparing for it. And instead of putting all his efforts into the proposed transaction, the process is left to its own devices - "maybe someone will come and buy, and if they don't, then fine, I'll sell it sometime." He won't come and buy, and if he does come, he'll buy it for next to nothing - just know that. Your enterprise is also a product, and a complex and very expensive one at that, requiring a search for its specific buyer.
And in order to sell it profitably, you need to put in the most serious efforts. So if you have firmly decided to sell your business - treat it as a full-scale project, with all possible responsibility, because quite a lot of money is at stake. Set priorities, outline an action plan, determine reasonable deadlines, appoint those responsible and allocate them the necessary resources. If you are still hesitating, postpone the deal until your decision is finally made.
The opposite situation also happens. Very often, the owner sells the business not because the most advantageous moment has come, but simply because he is tired of dealing with it, irritation and fatigue have accumulated. The goal of such a sale is not to make money on the business, but to get rid of it as soon as possible, even for a pittance. Go on vacation, relax, and upon arrival, weigh all the pros and cons again, and only then start acting. The advice is simple, but effective.
Business is a complex product. And the buyers of such a product are not simple people, and most importantly, they are different.
They are usually divided into two types: financial (portfolio) investors, interested primarily in the income generated by your enterprise and the growth of its value, capitalization. The second type is strategic investors. They are often interested not so much in income as in the technologies and specialists available at your enterprise, the markets you occupy, your connections and business reputation. It is clear that both the requests and needs of these buyers will be completely different: what will not be of interest to one, will be a very valuable acquisition for another. Find your buyer - you will earn much more. The situation is even more difficult for small enterprises: here there may be even more options.
Someone is looking for an opportunity to invest a little money in real production, someone is looking for a useful activity to occupy their non-working spouse, someone is going to expand their already existing similar enterprise... Before you begin the process of preparing your business for sale, try to imagine who it might interest. Put yourself in the shoes of potential buyers - what is most important to them, what will they pay attention to first of all? Have you imagined it? Then we can move on.
I recall an interesting story. Western investors come to an old plant from the Soviet era to negotiate a purchase. The chief engineer, in love with his plant, shows them the objects of his pride: a terrible-looking homemade automatic line assembled from some junk, equipment somehow adapted to perform operations that are not typical for it. This is really interesting, we must pay tribute to the specialists who were able to find non-standard technical solutions in the conditions of insufficient funding. But, alas, this is of little interest to foreign buyers: they pay millions of dollars not for the ingenuity of engineers. By purchasing the plant, they expect to gain entry to a new and promising market. Again, alas, the head of the sales department is on vacation - the director did not think that he might be needed...
The buyer knows what he wants to see - show him exactly this. Let's say you are selling a beauty salon. If the buyer is the owner of a chain of similar salons, he will certainly be interested in the flow of your clients, the presence of specialists with the necessary qualifications. You will spend most of your time in the showroom. If the buyer simply wants to invest money profitably, he will be interested in the profitability and stability of your business, which means that the accounting documents will be more important and interesting to him. Well, it is a completely different matter if the buyer is a rich businessman buying a business hobby for his wife. The main thing here is that she likes your salon, the rest is unlikely to have serious significance. The general rule is elementary: show not what you consider important, but what your potential buyer considers important.
Before selling a car, you should at least wash it thoroughly.
With business, it's the same story, only pre-sale preparation is much more important, because the mechanism for determining the transaction price is much more complicated and depends on dozens of different factors. So, you've determined what your potential buyer will pay attention to first. Now you need to make sure that all the advantages of your business are obvious, and the disadvantages are not too obvious. The difficulty here is that it is difficult for you, as the owner and, probably, the founder of the business, to look at it impartially and objectively. You will not notice the disadvantages that a new person will point out, you will miss the obvious advantages that you yourself have long since stopped paying attention to.
Of course, you can invite specialists, they already have a keen eye and sufficient experience, but this is not always economically justified - after all, the services of good experts are not so cheap. As a last resort, ask one of your friends to drop by your office - let him look at the enterprise, talk to people, and then tell you about his impressions. Most likely, even such a simple measure will give you enough food for thought. When talking about pre-sale preparation, you should not think that we are talking only about cosmetic techniques.
Very often, by making minimal efforts, you can significantly improve the investment attractiveness of a business - slightly optimize the management system, making it more transparent and understandable, put papers and reporting in order, conduct an audit, extend the most important contracts and agreements. By investing thousands of dollars in pre-sale preparation of a business, you can, in the end, increase its value by hundreds of thousands - where else will you find such a profitable investment of your funds?
So, you're ready to sell your business and you're confident that you've done everything you could.
There is a simple way to check. Visit a website where similar businesses are sold and try to get to know them, acting as a potential buyer. Try to try on their interests. Try to imagine that you are actually going to buy this business. What causes your doubts? What reduces the value of this company? Would you buy it for the proposed amount?
Now take another critical look at your business - have you taken everything into account, have you thought about everything? Here is another piece of advice: if the buyer who came to you, having become acquainted with the state of your affairs, decided, nevertheless, not to enter into a deal - try to ask him about what was the reason for the refusal. It is possible that he will give you advice that will bring you great benefit and additional profit.
As you can see, selling a business involves many steps and activities that are necessary to ensure that you get the maximum benefit possible from the proposed transaction.
If everything is done correctly, you will not recognize your business, it will become so much better, more attractive and, most likely, more profitable. It is not a curiosity, but a fact: in my experience, in about thirty percent of cases, when pre-sale preparation is carried out thoroughly enough, the owner eventually begins to doubt whether it is worth selling such a wonderful and promising company. This is normal. This simply means that the potential of your business has not yet been exhausted, that you see ways and resources for its further development. Why not, if in the end you can sell it for even more? Do not be upset if you change your mind about selling your enterprise - it means that your efforts were not wasted, and I sincerely congratulate you on this.
Selling a business is a difficult but noble task. After all, you are selling something that you have created with your own hands over the years of hard work, investing your energy, intelligence, experience and strength into a new business. All that remains is to sincerely hope that your work will be appreciated and will bring you considerable money, which, who knows, maybe will be invested in a new business. After all, this is exactly what you know how to do - create and build something new.
