Not every entrepreneur gets into the game to never get out. Even when your passion as a business owner is one of your defining features, for most of us, there comes a time to sell or take the risk of going under. If you’re among the lucky few that can honestly say their business sets the standard for your industry, it might be time to start looking around for prospective buyers. But before you go full bore—and even if you already have suitors—there are a couple of things to get straightened out before you bring that beauty to market.
In fact, one of the very things that probably makes your company an industry leader, especially in small business, is not just the recognition of your logo, but a little buzz that goes off in the minds of people who have used your product or service, and who subsequently fell in love with it. If you have this kind of brand equity, you’ll be able to cash in on it. But you can’t sell your business on the basis of that equity if the potential buyer is out of the local loop and is trying to swoop in and give you pennies on the dollar for all the years, blood, sweat, and tears you have put into your operation. So before you start shopping your business around, make sure it is completely obvious how well you are loved, not just how well you are established. This can be achieved by looking deeper than sales and profit margins. It can be gauged by customer recommendations, online mentions, your social media presence and popularity (how many fans or followers you have and how often they are chiming in about how much they love what you’re doing.)
Knowing the value of your small business means you’ll have to do some research as we are unlike a person trying to sell their home gets comps on similar homes in their zip code, try to ascertain the value of your local competitors. How have their sales been going? Do they seem to be in a place of desperation with all kinds of gimmicky sales promotions? Is their blog active? When’s the last time they posted on Facebook or Twitter, and how responsive is their following? If you ask yourself all of these questions and find that your business is coming out on top every single time, you’ve got empirical data that proves your brand is worth something—and this puts you in a position to confidently turn away potential buyers trying to purchase a new business for a steal.
If you’re not the kind of person (or entity) that cruises around buying out businesses and flipping them for a profit, then you have to keep your decision to sell on the down low. Meaning, if you are a true blue small business owner, don’t mention your plans of selling all around town. There are a couple of reasons this is a bad idea. First, if your loyal customers find out your business will be changing ownership, they could jump ship very quickly, and this downturn in business will hurt your profit margins, giving a potential buyer a bargaining chip they wouldn’t otherwise have had. Secondly, when your business is for sale, having word spread around town could have people begging you not to sell, and this can quickly become emotional for you. After all, you started this business, it’s helped put your children through school, allowed your husband or wife to stay home and be with the kids, and let’s face it, you’ve created a legacy you’re pretty proud of. When your brain is clouded with these emotions, you may decide to back out of selling, and ultimately this could wind you right back where you started just several months down the line.
When you get that intuitive sense it’s time to sell, and you know you have the brand equity to do so, go for it. Get some help from a business broker whose reputation is exceptional. Make anyone who knows about your plans to sell the business sign a nondisclosure agreement (NDA). And last but not least, take pride in the fact that you built an empire, no matter the size. If buyers are already courting you, you’ve raised that business right.
Image Credit:
Stuart Miles – FreeDigitalPhotos.Net
