Understanding how business buyers make their final buying decision is absolutely core to developing a good strategy to get them over the line. Are they actually buying what you’re selling? You may be surprised with the answer…
As a business owner, you may have a very clear idea as to what you’re selling. On the surface you may be selling the fitout, the systems, the location, the lifestyle, the brand or any other number of things. Logically, you’re also of course selling the profits and the turnover. Under the surface you may also be unconsciously selling all your years of hard work building the business.
That’s a lot of stuff to sell in one package.
What a buyer in the current market is actually buying is much simpler…
So what are they buying? You might find yourself jumping straight to higher level concepts such as ‘independence’ or ‘lifestyle’. Though it’s true that those things may attract them during the early enquiry stages, they are not the things that convert an enquirer into the person who actually buys your business. The reason: the business research process. Due Diligence, by its very nature is a highly technical, highly involved research process that by its conclusion, has stripped away the more romantic drivers to purchase in a business buyer. This reduces what a buyer is buying into its simplest form:
A business buyer is buying your business’s future profits for which you can demonstrate that, under predictable circumstances, they can and will be sustained for the next 3 to 5 years.
That may sound like a bit of a dry distillation of the business buying mindset, but the reality is that this sentence contains the two main drivers to purchase:
- That you can adequately predict your future profit (by demonstrating your historical profits through financial documentation).
- That under foreseeable future scenarios, the business’s future profits are not under threat (by demonstrating how internally secure your business is and how stable your industry/market is)
Of course, things like the fit-out, the lifestyle, the location etc are extremely important, but you could have one of the most wildly attractive and profitable business in the country and not be able to get a single buyer across the line if you can’t demonstrate those two main drivers to purchase.
The point of this blog isn’t to scare you. Not at all. The point of this blog is to remind you to keep this stuff in mind. If you are thinking of selling down the line, always remember what the buyer is actually buying, and take steps to cater for that.
Whether you’re selling today or in three years, here’s what you need to do:
- Start preparing your financial documentation:
(if you’re a long time reader of this blog, you’re probably getting sick of hearing this) Financial documents are the basis for any due diligence that a buyer might conduct, and without a solid method of verifying your profits, turnover and financial situation, most serious buyers will simply walk away. To solve this, you could speak to a financial advisor to see what you need, but really; just put yourself in the buyer’s shoes. What would YOU need and want to see if you were making a substantial investment in a business.
- Do what you can to reduce or eliminate risks, doubts and uncertainties in your business.
That’s easier said that done. SO, we’re going to give you a tool with which you can manage this process. It’s a free 12-page system designed to eliminate or offset the negative elements of your business that could cause a buyer to perceive a threat to your profits and stop them from proceeding with the sale. It could make you a LOT of money.
To get your copy of this booklet and to start working towards selling your business at its TRUE value, click the link below to download your FREE booklet.
Do those two things, and you’re on your way to selling your business for its true value.
Thank you for reading and good luck!
By Zoran Sarabaca
Principal of Xcllusive Business Sales
Sell your Business with Certainty
If you would like to speak to someone today about selling your business, or have any questions about your personal circumstances don’t hesitate to call us on (02) 9817 3331 or you can submit an enquiry by clicking here and we’ll get back to you as soon as possible.
DISCLAIMER: The information contained in this blog is for information purposes only. It is not meant to be considered as business advice. The points of view expressed represent reactions to the current business market and it should be noted that the market may be subject to change in the future. Reader’s specific circumstances may be different and have not been taken into consideration. Always consult with your professional advisors for any business advice.