Article Summary of 8 Ways to Sell Your Business Quickly at the Highest Price:
- The Price / Appeal Matrix
- 8 Tips Sell Your Business Quickly at a Fair Price
- The Most Important Business Decision
8 Ways to Sell Your Business Quickly at the Highest Price
Can you sell your business quickly and still get a fair price?
In a past post, I recommended that you price at or below market value to encourage a faster sale. For those business owners who need to minimize time-to-sale, this is good advice.
For many small business owners, there is a trade-off between selling quickly and selling at a high price. This trade-off happens because reducing price often increases the appeal, or the desirability, of the business. Many buyers are price conscious — unless you have an extremely attractive offering.
There is a relationship between price and appeal when selling a business.
The Price / Appeal Matrix
The below matrix illustrates my point.
Starting in the top left quadrant, a frozen sale occurs when a business owner values the business well beyond what the market is willing to pay. This is a common mistake for owners who fail to look at their business from an external perspective. These businesses rarely sell.
The bottom right quadrant is where many first-time business owners find themselves. Lowering price may increase the appeal, which could lead to a sale.
The bottom left quadrant is where many business owners who regret the sale come from. They fail to properly gauge market interest and end up with a less-than-ideal sale.
The top right quadrant is the ideal sale. Savvy business owners here create an enticing business and price it accurately, at what the market is able to support. While slower than a quick sale, this sale is best for the owner.
8 Tips Sell Your Business Quickly at a Fair Price
Each sale is unique. Sometimes an owner needs to make compromises when it comes to time-to-sale or appeal. However, I want to focus on improving the appeal and price, moving you from the left quadrants to the top right.
Below are my six top tips for how to maximize both appeal and price.
Tip # 1 Mindset and Preparation
Mindset and preparation are two key elements to selling quickly. If you haven’t read my previous post on selling quickly in Texas, start there.
After that, I highly recommend you take the Personal Readiness to Exit questionnaire. 75% of business owners regret their decision to sell. Don’t let this happen to you.
Tip # 2 Offer Payment Options
One word. Down-payments. If you can afford it, allow your buyer to make down-payments on the sale of the business. This will spread the sale over time and removes the requirement for up-front financing. This will open up the sale to more buyers, and allows for a sale that can net more money over the following years.
Tip # 3 Send a Business Summary
As a business owner, you know the importance of marketing. Communicating your offering to customers is part of generating a successful sale. If you do this with customers, why not with potential buyers? A business summary is a short document, no more than 20 pages, that describes the business and highlights strengths. Give this to qualified buyers.
Tip #4 Share Long-term Growth Plans
Before looking to sell, you had plans for your business. Create an overview of how a qualified buyer could expand the business. Detail how to scale the business. Convincing your buyer the business is poised for growth will increase the appeal and possibly the final sale price.
Tip #5 Don’t Neglect Current Operations
I’ve watched during sales as eager owners let day-to-day operations slip. This is a big mistake. Buyers can often pick up on this during due diligence. Don’t let this happen. Even better, create manuals and guides for how to run the business. This will build buyer confidence that they can take over and operate the business.
Tip #6 Don’t Jump Ship
While many buyers aren’t interested in having the original management around, some are. Savvy buyers know you are the heart and soul of the business, and having you around, if only as a consultant, will safeguard their investment. Offer to stick around.
Tip #7 Upgrade and Re-focus Your Marketing Efforts
During normal operations, your energy was focused on making the business look good to customers. Your new customer is a future buyer. That means your marketing efforts need to attract and engage qualified buyers.
First, refine your pitch and the image of the business. Then, get the word out. Target industry publications, business-sale websites (Bizbuysell, etc.), and any other places your qualified buyers may be.
Tip #8 Prepare Your Customers
A business with loyal customers is very attractive. Review your customers and communicate to your buyers that the customers will stick around. If you have testimonials, leverage those. The goal is to convince the buyer that the customers are there to stay.
The Most Important Business Decision
I firmly believe that the exit is the most important consideration a business owner has to make. Not only does a strong exit preserve the legacy of the business, but it generates the planned-for returns, allowing the owner to start what’s next.
Many business owners come to regret how they exit, but this doesn’t have to be the case. Plan ahead and work towards achieving a quick sale at a great price.
Have any questions or comments about 8 Ways to Sell Your Business Quickly at the Highest Price? Please contact me!