We often hear the term “stage your home” in the residential real estate market. Realtors use this tactic to get top dollar for a client’s listing and to sell the property faster.
The process does not come without a commitment of time and money, yet it produces results that benefit all parties.
The same concept applies to your business, though you’ll almost always hear brokers and advisors refer to it as “preparing your business for sale.”
In both situations, the seller must adapt his/her perspective to that of the buyer. Ask yourself, “If I didn’t own this business, would I want to buy it?”
Then use the following checklist of nine ways to improve the value of your business now;
- Grow revenue – It doesn’t matter what you have for sale, if sales are in decline this is a red flag to buyers. They want to know why, and is the trend reversible? The buyer’s inclination is to say “no” and this gives them a great opportunity, before they see anything else.
- Produce positive cash flow – Unless there are extraordinary circumstances, it’s essential that a business produces positive cash flow. If it does not, it’s an asset sale. Strive to improve cash flow. Exceed industry standards if possible.
- Automate – Implement processes and systems to automate as much as possible. Disciplined procedures that employees follow consistently sends a message to a prospective buyer that “I could run this business.”
- Plan – Set aside time to develop annual plans with quarterly reviews. Involve key people and use the process to identify ways to improve margins, differentiate your product and enhance other strategic value drivers. This sends a strong message to a buyer looking for quality with minimized risk.
- Delegate to key employees – Show a buyer that the business can run day to day without you. This also indicates that you have a quality and trained workforce.
- Create recurring revenue streams – This is significant in that it greatly increases the predictability of a certain percentage of your cash flow, leaving less to the whims of the marketplace. Check out the new book “The Automatic Customer” by John Warrillow.
- Track contracts and agreements – Maintain well defined, and flexible, leases, vendor contracts and client agreements.
- Produce clean business records – Keep up-to-date records on a system that enables you to generate key-performance-indicator (KPI) reports in a timely manner. If you operate a business with multiple streams of revenue, develop your reporting in a manner that isolates each stream and related direct costs.
- Apply fresh paint – Inside and out, you will be judged on the cleanliness and visual appearance of the business. Hire professionals to clean, paint and landscape while you declutter and reorganize the workspace of the business – offices, warehouse, vehicles, equipment.
Stage, prepare, call it what you will. The bottom line is this: acting now will help you attract more buyers, sell your business faster and at a better price than similar businesses for sale that take no action.
Gateway Business Advisors is owned by Gary & Nancy Hallett in Jacksonville Beach Fl. Their team has owned, operated bought and sold businesses ranging in value from $50,000 to several million over a 30 year period. They assist business owners in the preparation and sale of their business and buyers in finding the right business to purchase. They can be reached at firstname.lastname@example.org or (904) 372-9157