How to Help the Buyer Say "YES"
In previous articles I have discussed what impacts the value of a business and what makes a buyer say “NO” to purchasing a business. In this article I talk briefly on what things you should do to encourage the buyer to say “YES”.
Getting the buyer to say “YES” is not about cutting the price. You want to get the value you deserve, so you need to convince the buyer the value exists within the business. It is mainly about confidence – making the buyer feel confident and at ease with being able to run the business.
Once a buyer can imagine themselves running the business, you have eliminated many of the more common objections to buying a business.
So what should you have in place to help the buyer say yes?
Sale Document or Information Memorandum
This is one of the most important documents you will prepare – and preferably it should be prepared by a professional, such as a broker or business advisor. It not only sets the scene for your business, but also should explain clearly where the profits are generated and justify the price you are after.
It is also a suggested roadmap for the future of the business. This is important to show a prospective buyer where the opportunities are as well as demonstrating the business is not just about the owner.
Don’t Hide The Weaknesses
Every business has its weaknesses – and trying to hide them from prospective buyers is futile. Instead, show that these weaknesses can be turned into opportunities with the right buyer, and that you have plans in place to deal with them.
Documented Processes & Systems
One of the most common reasons a buyer says “NO” is that they feel they cannot run the business because it relies on key individuals to function correctly. Often the owner is the only person who knows about key parts of the business. Having the business systems and processes documented helps demonstrate that others can run the business. It also helps to improve the productivity of the business because everyone understands their roles and what is expected from them.
Succession Plans and Job Specifications
Losing employees is inevitable in most business sales – people will decide its time to move on, have uncertainty about the future or have a better offer. Making sure you can replace these people quickly is important to a prospective buyer. Have detailed job specifications for all key positions in place, with notes on what you would be looking for in a replacement. Have a list of potential replacements, should key people decide to leave. Have clear plans in place on how you will resource your business into the future.
Having a regular reporting system in place and communicated to staff is very important in demonstrating that people know what is going on and how they impact the business. It is not just about showing a growing business, but that there are systems in place to keep the business running smoothly. By demonstrating you have regular performance reporting in place, you make a prospective buyer feel confident that the business is working effectively.
Keep The Workplace Tidy
Regardless of the nature of your business, keeping a clean and tidy workplace will always help the sale process. Other than improve productivity and safety, it also makes the buyer feel comfortable that the business is well-run. It is not just a fresh coat of paint, but making sure workplaces a free of clutter, are well organised and operating effectively helps convey the impression of a smooth operation and gives the buyer confidence that they can continue to operate the business.
Have you thought about how you will get the sale price your business deserves? Do you rely on the sale of your business to fund your retirement? Have you thought about your exit strategies?
Maxell Consulting works with business owners to help them understand what their business is worth and how to get the right sale price.
Maxell Consulting has helped many businesses identify the value in their business and empower the owners to develop plans to crystallise that value.
We offer a free assessment of your situation and review what potential value exists within your business.