Selling your business can be one of the most fulfilling things you’ll do as an entrepreneur. This is especially true if your initial plan was to grow the business into a successful company and sell it for maximum profits. But it is equally fulfilling when you are seeking new opportunities, experiencing declining revenues, or having partner disputes.
The main challenge that many business owners face is finding the right buyer. You probably are struggling with the same, and are seeking answers. This article will provide great insights to help you reach out to the potential audience and even sell your business for the best price.
What drives buyers?
There are different types of potential buyers in the market. The main type of buyers are strategic, financial, and operator buyers. Strategic buyers include companies that are already running in your niche (or those that seek to join in). In most cases, these buyers are large companies, but can also be small businesses with robust resources seeking to expand exponentially by purchasing larger businesses. Strategic buyers buy businesses for:
- Horizontal expansion
- Vertical expansion
- Eliminate competition
The good thing about selling to strategic buyers is that you’ll get the most profit because they have resources and interests.
Financial buyers include professional investors who present as hedge funds, investment partnerships, and private equity firms. Their primary focus is cash flow and hidden value. They see your business as an opportunity to acquire a steady flow of current and potential cash at a reasonable price. In some cases, financial buyers can buy the company and still let you run it. However, their long term goal is always to sell the business at a higher price.
Operator buyers are mostly people or groups of people who want to run a successful business. Their goal is to acquire your business and enjoy a good income and a nice lifestyle and possibly sell it later on when they come across a good deal. Operator buyers can be experienced buyers seeking to change their careers or life. Unlike financial and strategic buyers, operator buyers may not have adequate experience buying a business and may need guidance. They may also have a hard time securing funding.
How to let people know about your business
The first step to selling your business is to know whom you want to sell to. Understanding your target audience is crucial for success. It will allow you to optimize your marketing strategy for the prospective buyer. It will also help you know where they hang out, so you can focus your ads.
If your business is popular, take for instance a household name, like Seattle’s Starbucks Coffee or even a popular smaller franchise, a word that it’s for sale may be enough. However, you’ll likely need to spread the word even further. You can inform the people within your circles or use outlets like newspapers or trade publications for advertising. You can also use business listing websites like BizQuest.com or BizBuySell.com to reach a broader audience. But if you have a hard time doing this, it might be a good idea to hire a business broker to do it for you. Let’s look at these and more options in detail.
Advertising on an online business-for-sale marketplace is perhaps the most effective way to get both the highest quality and quantity of buyers interested in your business. Thousands of buyers and sellers search and visit these marketplaces every month. With such platforms, you can easily target prospects by creating an appealing profile for your business.
When listing your business on these platforms, you should always include relevant information that potential buyers are seeking to help you stand out. This may include things like how much your business is worth, your business valuation, tax returns, and profit and loss. Again, you want to have financial documents readily available to back up your value claim.
Listing your business on business-for-sale platforms allows it to appear in buyers’ search results when searching for companies like yours. In most cases, you will have to pay a small fee whenever someone clicks on and views your listings’ details.
But you have to be careful when picking an online marketplace. These sites aren’t created equal. Some might charge a monthly fee that isn’t tied to any performance. Some may have more traffic than others. Some may have better search functionalities than others and so on.
Hire a broker
A good business broker will do the heavy lifting and take the stress from the process. He or she will help generate interest in your business from prospects via their connections with other brokers and industry leaders. They will list your business in their website and spend time vetting prospects and ensure the confidentiality of the process. Brokers understand the need for anonymity during this process. A professional broker brings perspective and experience. He or she can also help you:
- Plan your business marketing for sale
- Identify potential deal breakers
- Determine a price range
- Review key documents
- Structure a deal
- Make important recommendations
You can approach your buyers directly through email, fax, or phone calls. The direct approach is ideal for businesses valued at $1 million or more. But to do this, you’ll first need a list of names and contact details for prospects. If you wish to maintain anonymity, then you should have someone else do the contacting.
Advertise within your industry
You can advertise your business for sale across your industry. This involves advertising in trade magazines, publications, and other media that’s niche-specific. But since you’ll be marketing to people who are familiar with your business, you might not make good profits with this kind of marketing. This is because the prospects may not see value in the goodwill that you may provide – like training.
Advertise outside your industry
Business brokers prefer advertising a business for sale outside the industry than within because of the reasons above. They use print media like newspapers and web media like websites to gain as much exposure as possible. You can try outside advertising to let people know that you’re selling your business.
Social media platforms
Social media platforms like Facebook, LinkedIn, and Twitter can be valuable when selling your business. They not only allow you to reach the potential audience but also help to show prospects that your company has a strong brand image.
More than one-third of the global population, or 2.3 billion people – are active on social media. And considering 91% of retail brands report using at least two social media channels, overlooking the marketing channel can mean losing out.
The idea is to understand your prospect’s behavior – like where they hang out online, who they listen to, etc. With this information, it will be easy to put your information and business where these prospects can find it.