Introduction to Selling Your Business
Welcome to Selling Your Business 101. We are going all the way to the beginning, a true introduction to the complexities of a commercial transaction. Before you delve into tax implications and government regulations, before you think about vetting and interviewing would-be buyers, before you start planning the closing, you need to position yourself for a successful sale. And this means marketing your business in a way that compels prospective buyers to action.
How Can I Sell My Small Business Fast?
If you want a streamlined and fast sales process, you need to put in the work upfront. In some ways, it is similar to selling a house: before you plant the For Sale sign, you make some improvements, declutter, and maybe add a fresh layer of paint and some curb-appeal plantings. But in many other ways, the commercial process is much more complex. There is a great deal that needs to be done before your broker can begin to share the selling memo (also called the blind report, confidential description book, or offering memo).
On average, it takes six to nine months to sell a business. Keep in mind that this is a wildly generalized figure, and it may take more or less time. If less is more in your situation, focus on getting your ducks in a row far in advance.
Brokers are responsible for marketing your business to potential buyers in their networks (and the networks of their connections). But there is a great deal of work that can be done to facilitate a smoother sales process from an internal perspective.
Class Number Two in Selling Your Business 101
Included in the selling memo is:
- A comprehensive description of your company. This is your prospective buyer’s introduction to your business, and you need to paint a picture of its potential. At the same time, it is important to be factual. If you stray outside the strict lines of reality, then buyers (and their brokers) will uncover the discrepancies.
- Not the place for confidential information. Stick to the what’s and why’s – not necessarily the who’s and how’s. You need to present your company as an attractive option without giving away the most valuable information you have.
- An overview of earnings and asking price information. Again, though, you do not give a full set of financials at this point. Not the time nor the place.
- A CTA. Think of your selling memo as a call to action. You want to compel prospective buyers to take the next steps towards a purchase.
It is critical that your selling memo be factual: we cannot stress this enough. That said, the time to make improvements that allow you to emphasize benefits for potential buyers.
At the top of your to-do list:
Create Clearly Defined Customer Avatars/Personas
One of the most important components of your selling memo is customer information. Do not leave it at the bare bones; instead, flesh it out with clearly defined customer personas or customer avatars.
This will help the new owner understand exactly who you are selling to (because, no, the answer is not everyone!). It will help you identify and clarify who your potential buyer’s ideal customer is. This is essential in creating and implementing marketing strategies and campaigns that target them with precision. Using a variety of resources, including customer surveys and demographic information, determine the following about your ideal customer:
- Gender. Think beyond whether the product/service itself is intended for a specific gender; who is typically the one making the purchase decision in this area? (It could be an even split)
- Age. Again, think about the decision-maker. If your products/services are geared towards children, for example, you need to also market to the adults with the wallets!
- Motivations (goals, aspirations).
- Shopping Habits
Ask yourself, “Why does my ideal customer buy my products/services?” Use insight from each point listed above to get a better understanding of the answer – and of effective marketing strategies. Investing time, effort, and resources here now will pay off when it comes to the sale.
Ensure You Have a Multiple Item Strategy to Build the Average Sale
A prospective buyer isn’t necessarily looking for a safe bet. They know that there is risk involved in any business, even ones on sure footing. That said, they are looking for a company that has strong revenue and growth potential. By building a multifaceted strategy to increase the average sale, you can create positive impacts today which will generate the sales of tomorrow.
How do you increase the average sale? Well, in the example of McDonald’s, they ask, “Do you want fries with that?” A simple yet brilliant way to boost the average transaction. Add-ons are just one way to accomplish your goals. Others include:
- Raising your prices (within reason)
- Starting by offering higher priced products/services first and moving down, if necessary
- Making sure customers are aware of your full product/service line
- Selling additional services and warranties
- Trading discounts and using a give-aways of perceived value in their place (ensure these products/add-ons do not cut into your margins)
- Bundling your products/services
So, how can I sell my small business fast?
Get a head start by consulting with AMB Performance Group. We offer the guidance, support, and actionable advice you need to accomplish your goals. Set yourself up for success; contact our team today.