Selling a Business Through the Buyers’ Eyes

Get out of your shoes. Get up! It’s time for you to take over the shoes of someone else.

The buyer. The buyer. That’s what they appear like when you first meet them. Let’s break down that barrier of uncertainty and discover what you need to do to get your business on the market. It’s time to examine the buyers’ behavior and processes.

1. Motivation

Imagine this, Mr. or Mrs. Buyer: You’ve got a lot of capital and are ready to start your own business.

There are two choices.

You can start your business from scratch, which is cheaper but riskier.

The second option is to buy an existing business and capitalize on its established profitability and structure.

You choose the one that will bring you consistent, quick income. You can buy in.

2. Who are you?

So, Mr. Buyer, what business are you searching for? You’re likely looking for a company that:

  • Are you very familiar with the industry?
  • Is it a situation/environment that you find quite favorable economically
  • The best performer (i.e., The best deal you will find

If you are smart, you may also have hired an experienced broker to help you purchase your business. They will know that the difference in results will well offset their commission.

3. Business, Business, and Business

You have found several businesses that match your criteria. It’s now time to get down to work. Now you need to look at the financials and talk to the staff.

Five simple questions will determine the success or failure of your business.

  1. Are the reasons for selling favorable? It’s not a good idea to purchase a business the seller sells because they have run it into the ground. You’ll be willing to buy it at any price they offer if they sell it because they have made it.
  2. Is the business well-known? Unmotivated staff, unhappy customers, and angry suppliers could all spell doom for the company. These are just a few of the many problems that can be a problem.
  3. Is the company able to control its market position? You will have great opportunities to grow and adapt to the business if it is a major player in the market. You can live in fear.
  4. Are the numbers in balance? Consider moving on if the costs of labor and materials prevent the business from making a profit. Smart cost-cutting can improve the bottom line without sacrificing the quality of products or services. But if the numbers don’t work, then the business will not.
  5. Does the business have a good reputation? Although a reputation isn’t something we can assign a dollar value to, it will give you a better chance of success if the business has a strong reputation with customers or suppliers.

4. The Finishing Line

Although the business you have your eye on passed all your tests, it has yet to be ready to go. Now it’s time for you to get into the business.

This is your final piece of homework.

  1. Review the balance sheets, cash flow, and profit and loss statements of the business for at least three years. We’ll give the company a tick if it is financially sound.
  2. You can come up with new ideas to help grow your business. The business will be more valuable if you can develop a new product or service or make improvements in the processes that will significantly improve the bottom line.
  3. Assess the intangible assets. Does Intellectual Property protect the company? Are there any patents or trademarks that the business has? These are not things that have a fixed price, but they can greatly impact the viability and success of the company.

Great job! These shoes are now out of your reach.

And get excited! You have a unique insight that few sellers have: the ability to see how buyers think.

Print this page and make notes. These plans will help you increase the value of your business to potential buyers. Engage a Business Broker to maximize your business’s potential.

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