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The Mistake of Not Marketing Widely Enough
Many things can increase the sale price of your business. You can normalise your accounts, mitigate weaknesses, and diversify your customer base –but nothing has a greater impact on the amount you're offered than having buyer competition at sale time.
This makes marketing one of the most essential aspects of your sales strategy. Unfortunately, it’s also one where a lot of business owners struggle, especially if they’re conducting the sale themselves. Marketing is one area where it’s important to spend strategically, knowing you’ll get a great return on that investment.
Types of Buyers
With any product you sell, it’s important to know who you’re selling to, and your business is no exception. Most types of buyers fall into one of three categories. There are strategic buyers, who are already in your industry or seeking to enter it. They're interested in expanding their existing operations or creating synergy by combining your brand with their own. It’s also possible that they're your current competition hoping to take a competitor out of the industry.
Next are financial buyers. These buyers are professional investors who are looking for businesses that will provide them with regular profits and a good return on investment.
The last type of buyers is operator buyers. These are people who want to own a successful business. They may remind you a lot of yourself when you started the company, and many are first-time business owners. They are looking for a business that provides them with a good income and lifestyle.
Think about your own business and where you’re likely to find buyers. The higher the value of your business, the more likely it is that you’ll be looking for strategic or financial buyers; businesses valued at more than $2 million are likely to be bought by companies, not individuals. When you know the sort of buyer you need, you’ll have a better idea of where to find that buyer.
Where to Find Buyers
Marketing your business for sale is a little different than marketing a product. You’ve probably been told that confidentiality is key when selling your business. But how can you cast a wide marketing net to foster competition when you can’t even mention that you’re selling?
You can reach out to people you know if you trust them to keep it quiet. Think about your possible buyer first. If a financial buyer is likely to purchase your business, it’s no use mentioning it to people you know unless you’re friends with a hedge fund operator. However, if your business will attract operator buyers, it’s possible that you have a friend or even a staff member who would be interested in taking on the business.
You can also get the word out widely on the internet. Many online marketplaces advertise businesses. Do some research to find the best sites, looking specifically at their visitor numbers, especially if they're asking you to pay. After you take the identifying characteristics out of your advertisement, you can advertise on these sites very easily.
Bring in the Experts
Often, it’s best to work with experts when it comes to marketing. Brokers know how to show off your business’s best assets while keeping all the details vague. They also have a far larger network of potential buyers than you, and new prospective buyers reach out to them looking for a good business, bringing more qualified buyers your way. Although you may have to pay a little more to work with brokers, the time they save you and the expertise they bring make it a great investment.
Marketing is an essential part of selling your business, so make sure you don’t overlook it. Having competition from buyers results in a better price being offered to you at sale time, so any investment you make at the start of the process will result in more dollars in your pocket when you sign the deal.
For further information, contact your nearest LINK Business Broking Office.