Positioning Your Small Business For Sale

Press release from Brian Bond:

May 23, 2021

Positioning Your Business for Sale
Selling a business can be a difficult and often personal process. Business owners can treat their
business like a child they brought into the world, making it hard to let go. Owners want to see the
business they created thrive even if they no longer own it which is why finding the right buyer is
so important. Finding the right buyer can be a difficult task, however as a business broker, I have
helped dozens of small business owners sell their business and there are a few steps you can take
to make the process easier while ensuring buyers see value in your company.

Determining the right time to sell
Ideally, plan your exit one-to-two years in advance while continuing to grow your business. You
should contact a broker to explore your options well in advance of the sale of your store. Many
business owners think that is way too early to engage a broker, but a professional business broker
will appreciate the planning.

In my experience, many owners tend to overvalue their business leading to some difficult lessons
about the selling of their busines. When you think every day about selling your business you may
have already checked what other similar businesses are selling for. Just because another store
sold for a certain amount does not necessarily mean you will get the same value.
Putting your business on the market with at least 2 years of positive growth will be more
appealing, more valuable and easier to sell.

Determine Sales Price

When determining the selling price, we look at several different variables. These include
financials, the owner’s role in the business, how many hours they work a week, the experience of
the management team, the quality of the assets, and how the business is trending year over year.

When it comes to your financials you should have at least the last 3 years of income statements,
balance sheets, and corresponding tax returns. A buyer will look at this information to see if the
business is profitable.

A profitable business will typically be valued based on the seller’s discretionary earnings. These
earnings are the pre-tax and pre-interest profits before non-cash expenses, one-time investments
and any non-related income expenses. Having detailed books and records with verifiable
discretionary earnings, the more value you will get for your business.

Look at what comparable businesses have sold for to help you decide an attainable asking price.
Keeping in mind of course this is simply the asking price and the final sales price can vary. To
achieve the highest results the more attractive you make your business, the more potential buyers
you’ll attract, the higher sales price you will receive in the end.

Maintaining your equipment

To receive proper value for your business you must maintain high standards. Make sure your
store is clean. You don’t want a potential buyer turned off because you didn’t replace stained
ceiling tiles, clean your taps, dust your wine bottles, or have your shelves fully stocked.

Additionally, a buyer is not going to pay top dollar for a business requiring thousands of dollars
in repairs. If something is broken fix it before you show your business. You don’t need to invest
in new coolers, you just need to maintain your equipment. If a piece of equipment is on the verge
of breaking, then disclose this information to the buyer so you don’t have issues after closing.

Managing Your Online Presence

Buyers doing their due diligence on your business can easily gauge the perception of your store
through online reviews. Managing your reputation online is important. Obtain new 5-star
reviews. Good reviews go a long way in solidifying the goodwill associated with your business.

The goal of this process is to bolster your positive reviews while driving down any old negative
reviews, if any. Businesses with negative reviews are not appealing to buyers. If you have any
PR issues, I highly recommend fixing common complaints such as out of stock merchandise or
peeling paint before a potential buyer brings them up.

Again, this is why planning an exit is important. Having 1-2 years since your last batch of
negative reviews can help you sell your business faster and for more money.

Selling your store can be a complex process. Follow these tips as you are planning your sale to
position your business for the best possible evaluation and sale.

Author:

Brian Bond is the principal of Strategic Business Brokers Group, a brokerage firm in Scottsdale,
Arizona. Bond has helped business owners sell their business across Arizona. Bond has been
named “Broker of the Year” by the Arizona Business Broker Association.

This press release was produced by Brian Bond. The views expressed here are the author’s own.