10 Items a Buyer Wants to See Before Purchasing Your Small Business

When a potential buyer is considering your small business, they look for several key factors to determine whether your business is a good investment. In my opinion, here at the top ten items a buyer is looking for when they open the hood of your business and look inside:

1. Financial stability and growth potential. Buyers will want to see evidence of your business’s financial stability and its potential for future growth. This includes reviewing financial statements, analyzing market trends, and assessing your company’s competitive position.

2. Strong customer base. A business with a loyal customer base is more attractive to buyers because it indicates a steady revenue stream. The buyer will also want to assess the quality of your business's relationships with suppliers, partners, and other stakeholders.

3. Good management team. A competent and dedicated management team is essential for the success of a business. Buyers will look at your management team as if you were not around to ensure it has a track record of success and a deep understanding of the industry.

4. Proven business model. A buyer will want to understand your business model to ensure it has a clear path to continued profitability. The buyer will want to assess your business's systems, processes, and strategies to ensure they are effective and can be easily replicated.

5. Intellectual property and proprietary technology. Buyers will want to assess your business's intellectual property and proprietary technology to determine its value and potential for future growth.

6. Attractive market and industry. A buyer will want to see that your business operates in a growing and attractive market with a high demand for your services.

7. Reasonable price. Buyers will want to see that the price and terms you expect are reasonable and in line with industry standards. This will involve conducting a thorough market analysis and reviewing comparable sales.

8. Well-organized and current books and records. Sloppy, incomplete, or out-of-date books and records are a red flag for many buyers. The old say “how you do anything is how you do everything” applies to books and records. If your records are sloppy, a buyer will wonder what else is not being kept current.

9. A flexible owner. Over 50% of failed sales happen during the due diligence phase of a sale. And that usually means the owner was inflexible in his or her terms for the sale. In the initial discussion with a buyer, if you’re the seller, make sure you convey your willingness to work with the buyer to make the sale work for everyone.

10. A transition plan. Buyers want to know you’re following a sound transition plan for the business sale, including what happens after the close.

It helps you to consider your business from a buyer’s perspective. Look at these 10 items as a buyer would and if there is work to be done in any of the areas, let’s have a Get Acquainted call. Together we can strategize what needs to be done to get your business in buyer-ready shape.