7 Keys to Improve the Odds You Sell Your Business

According to an article in Forbes.com, 70% of business owners fail to sell their businesses when that was the goal. To help you beat these odds, think of selling your business like preparing for a hike. Just as you pack your backpack with essentials and plan your route, selling your business requires careful preparation and strategy. In this article, we'll share seven keys to help you navigate your journey and get to your destination.

1. Set a Realistic Asking Price: Pricing your business too high can deter potential buyers, while pricing it too low could result in lost revenue. The best way to set the right price is with the help of an independent professional valuation expert (a professional with a CVA or ABV designation).

2. Prioritize Profitability Over Revenue: While high revenue figures may seem impressive, potential buyers are more interested in profitability. Focus on improving your business's bottom line by optimizing operations, reducing unnecessary expenses, and increasing efficiency.

3. Organize Books and Records: Before listing your business for sale, ensure that your financial records, tax returns, contracts, and other important documents are well-organized and up-to-date. Organized documentation not only facilitates due diligence but also instills confidence in potential buyers regarding the transparency and reliability of your business operations.

4. Document Systems and Processes: Documenting your business's systems, processes, and workflows is essential for smooth transition and scalability. Clear documentation provides buyers with insights into how your business operates and minimizes the risk of disruption during ownership transfer. Invest time in creating comprehensive manuals, standard operating procedures, and training materials that outline key aspects of your business operations.

5. Find Good Fit Buyers: Identify potential buyers who fit your customers and clients. Yes, a good buyer must have the financial resources, but a good fit buyer is more than that.

6. Do Your Due Diligence: While a potential buyer is digging into your business, you must do the same for the potential buyer to protect your interests and qualify the buyer.

7. Negotiate Effectively: Negotiate based on your interests, not your positions. Read the 1992 book “Getting to Yes” by Fisher and Ury to learn more. Consider engaging professional negotiators or advisors who can advocate on your behalf and help navigate complex negotiations.

This may seem like a great deal to do. But this is the reason I use the analogy of taking a hike. You don’t get to the end of a hike all at once. You get there by taking it one step at a time. By following the tips we've outlined, you'll be better equipped to reach your destination successfully. So, take each step with confidence, and may your business sale be a rewarding adventure!