Preparing your business and yourself for the transaction process can be tough. It will take a fair amount of work on your part, the right help and the right mindset. Knowing what’s ahead of you can also be a huge help, so this is part two of a series of three articles that will address the three biggest aspects of your business sale that you need to be ready for – hopefully long before you are in the thick of the transaction process. Potential issue #2? Thinking like a buyer.
Think Like A Buyer
Like all of the issues a seller must face when putting up their business for sale, looking at your business through someone else’s eyes can be tough. You love the shade of blue paint you picked for the walls, it was your mom’s favorite color. A buyer, however, doesn’t care that you used paint to memorialize your mother. All they see is the paint by the window is faded from the sun and that the whole place needs to be repainted, maybe even gutted.
Your business is your baby, and it can be really hard to see it in an objective manner. However, if you really want to sell, this objectivity will be very important to the success or failure of your sale.
First take a good, hard look at the physical appearance of your business. Does it need a fresh coat of paint? Is the furniture beat up and stained, or is it in good repair? How clean does it look and smell? Is the carpet sticky? One of the major complaints prospective buyers make is about the cleanliness of a business the first time they see it. If your business is filthy and/or looks unloved, then that bad first impression will be very difficult to overcome, even if you have fantastic numbers. Keep your business clean, and give it a thorough once-over before you put up for sale.
Next, what does your equipment look like? Does it all work? Are there lightbulbs out? Is the handle on your food cooler falling off? Is only one burner on your six-burner stove actually working? Buyers will see broken equipment or equipment that has been poorly maintained as a reflection of how you probably run all of the other parts of your business, even if you are on top of everything else. Keep your business equipment in good shape and fix what’s broken long before you have to show it to a buyer.
Now that you have the aesthetic parts of your business in order, you need to focus on your documentation. Nothing is more frustrating or looks more suspicious to a buyer than a business seller who can’t produce requested documentation in a timely fashion. If it takes you two weeks to assemble a copy of your lease and a copy of last year’s tax return, then it certainly looks like your record keeping is a mess. Stay proactive and organized with all of your business documentation so requests can be quickly answered and the transaction process will go much more smoothly.
Once you decide on a listing price, you will need to be prepared for the reality that your business will probably sell for less than asking. Your listing price is a starting point for negotiations, as is the initial offer from a buyer. A buyer isn’t going to offer their top dollar on the very first try, so again thinking like a buyer will be critical. What would you offer if you were in their shoes and had only the documentation you’ve provided to go on? Ask for and listen to their justification of the amount they offer, as each point may be a point of negotiation. While it is true that some buyers are just kicking tires and submit extremely low offers just to see if you’re desparate, most serious buyers aren’t trying to insult you or your business. They’re just trying to get the biggest bang for their buck.
Thinking like a buyer can be tough when we’re talking about a business that you’ve been personally invested in for so long – but stepping out of your seller’s role and looking at your business, the negotiations and the entire process through a buyer’s eyes will help a great deal to ensure the success of your sale.
Are you a seller who’s seen nothing but extreme low-ball offers? Do you have questions about what your business and the numbers look like with an objective eye? Are you tired of just being told what you want to hear and are looking for a successful chance at selling instead? Please feel free to leave us questions or comments here, we would be happy to help.
Want to read Part 1, Time To Prepare? Click here.
Want to read Part 3, Emotional Readiness? Click here.
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