The Variety of Variables Involved in Selling Your Business
Selling a business is more than a big decision, as it is also quite complex. Finding the right buyer for a business is at the heart of the matter. In the recent Forbes article, “Ready to Sell Your Business? Follow These 3 Tips to Find the Best Buyer,” author Serenity Gibbons outlines that selling a business is a multifaceted process with a lot of moving parts.
A central variable for those looking to sell a business is to have a coherent and well thought out exit strategy in place. She points out that at the top of your to-do list should be selling your business the right way, and that means having a great exit strategy in place. In fact, many experts feel that you should have an exit strategy in place even when you first open your business.
Another key variable to keep in mind is that, according to Gibbons, only an estimated 20% to 30% of businesses on the market actually find buyers. This important fact means that business owners, who usually have a large percentage of their wealth tied up in their businesses, are vulnerable if they can’t sell. It is vital for business owners to make their businesses as attractive as possible to buyers for when the time comes to sell.
This article points to author Michael Lefkowitz’s book “Where’s the Exit.” This book outlines what business owners need to do to get their business ready for their exit. Updating your books, ensuring that a good team is in place and ready to go and taking steps to “polish the appeal of your brand” are some of the important topics covered.
Gibbons notes that “not every buyer with cash in hand is the right buyer for your company.” Mentioned are three key variables that must be addressed when looking to find the right buyer: consider your successor, explore your broker options and find a pre-qualified buyer.
In the end, working with a business broker is the fastest and easiest way to check off all three boxes. An experienced professional knows the importance of working exclusively with serious, pre-qualified buyers. Since a good business broker only works with serious buyers, that means business brokers can greatly expedite the process of selling your business.
In her article, Gibbons supports the fact that working with a business broker is a smart move. Those looking to get their business sold and reduce an array of potential headaches along the way, will find that there is no replacement for a good business broker.
Selling Process & Complete Guide:
Work With Advisors:
Working with experienced business brokers in Virginia can help you align these strategies and achieve the best possible outcome.
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How Employees Factor into the Success of Your Business
Quality employees are essential for the long-term success and growth of any business. Many entrepreneurs learn this simple fact far too late. Regardless of what kind of business you own, a handful of key employees can either make or break you. Sadly, businesses have been destroyed by employees that don’t care, or even worse, are actually working to undermine the business that employs them. In short, the more you evaluate your employees, the better off you and your business will be.
Forbes’ article “Identifying Key Employees When Buying a Business”, from Richard Parker does a fine job in encouraging entrepreneurs to think more about how their employees impact their businesses and the importance of factoring in employees when considering the purchase of a business.
As Parker states, “One of the most important components when evaluating a business for sale is investigating its employees.” This statement does not only apply to buyers. Of course, with this fact in mind, sellers should take every step possible to build a great team long before a business is placed on the market.
There are many variables to consider when evaluating employees. It is critical, as Parker points out, to determine exactly how much of the work burden the owner of the business is shouldering. If an owner is trying to “do it all, all the time” then buyers must determine who can help shoulder some of the responsibility, as this is key for growth.
In Parker’s view, one of the first steps in the buyer’s due diligence process is to identify key employees. Parker strongly encourages buyers to determine how the business will fair if these employees were to leave or cross over to a competitor. Assessing if an employee is valuable involves more than simply evaluating an employee’s current benefit. Their future value and potential damage they could cause upon leaving are all factors that must be weighed. Wisely, Parker recommends having a test period where you can evaluate employees and the business before entering into a formal agreement.
It is key to never forget that your employees help you build your business. The importance of specific employees to any given business varies widely. But sellers should understand what employees are key and why. Additionally, sellers should be able to articulate how key employees can be replaced and even have a plan for doing so. Since, savvy buyers will understand the importance of key employees and evaluate them, it is essential that sellers are prepared to have their employees placed under the microscope along with the rest of their business.
Selling Process & Complete Guide:
Work With Advisors:
Working with experienced business brokers in Virginia can help you align these strategies and achieve the best possible outcome.
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Maybe Your Business Needs A Pivot
The concept of pivoting is a current darling of the business strategy illuminati. As it relates to business, it means little more than making changes to a marketing strategy, pricing, supply chain, product or service offering, or strategic approach to business.
Business Is Not Static
It might be a cliche, but it’s true: One constant in business is change. For a startup business, this might mean that the original vision is not compatible with the current economy, customer demands, suppliers, or competition. Perhaps the appropriate in-depth research was not conducted before the business was started or internal or external factors changed soon after startup.
For a more mature business, maybe there has been a shift in the customer base, competition, product or service demands, or newer products or services available to purchasers.
Regardless of the factors that change in a business’ environment, the business itself must be adaptable.
Embracing change provides businesses opportunities that might not be available if they cling to the status quo. Changing or pivoting various elements in the business can have a profound, positive effect on its long-term growth, profitability and sustainability.
Components Of Change
There are numerous components in any business that might need changing such as:
- Pricing
- Strategic approach
- Vendors
- Procedures
- Employee skills
- Supply chain
- Products or services
- Marketing
- Customer service
- Branding
- Distribution
The list, of course, is almost endless depending on the business, industry, location, and economy.
Pivoting: The Game Changer
Wherever the business is in its life cycle, change is inevitable. For those business owners who are reluctant to change, business stagnation is a definite possibility that may loom in the future. But for business owners, who take an opposite approach and understand the importance of progressive change, opportunities are almost limitless.
The time for change is not at some distant time in the future. Change can and should be continuous. Minor changes can take place daily and weekly while major changes must be properly planned with scheduled execution dates. The idea is to always have some type of forward momentum.
Measurement Is Vital
The most important element of change is measurement. If the action or change is not measured, then it is difficult to determine if the change produced the desired outcome. Sales, phone calls, marketing, customer complaints, expenses, employee turnover, new product acceptance, target marketing, etc. can all be measured. When changes are measured and work as intended, then those changes can become permanent (until changed again). And if the results weren’t what you were looking to achieve, then those changes can be either revised or completed eliminated.
Not All Changes Will Work
Certainly not all new ideas should be implemented nor will the changes that are implemented turn out as planned. It’s important to know what small adjustments can be made that might produce be a positive impact with the least amount of disruption and cost. Finding efficient changes is both the key and the hardest part, as luck would have it!
If nothing is ever changed in a business, the status quo remains the same, which is why one of the most important aspects of business growth is understanding that the mere act of changing one or more elements in a business has the possibility to produce growth and increased net profits. Perhaps, now is the time to consider some type of pivot for your business.
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