Business owners are often too busy to read books, blogs, or even work out.  They often times invest their heart and soul into their business and, unfortunately, when it comes to selling it, they seem to only want the quick answer.  I often work with business owners on an exit plan, a personal financial plan, or a key employee incentive plan, but really, all they want is out.  So if you want the quick and dirty answer to your question, here it is.

There are two significant hurdles you need to be aware of when selling your business.  The first one is why the value of your business equals your sales price.   Remember, value is perception and price is cash so you must understand the difference.  This is a once in a lifetime decision for most buyers and, besides their house, probably the biggest transaction they will ever deal with.  You have to be prepared to validate what they are getting for the money.  This is no easy… task since value is only a perception, not a reality.  Value changes over time, both higher and lower, and can even change while negotiating a deal.  Here is an easy example: the value you have put on a family heirloom is probably worth more than the purchase value.  You will need to convince the buyer that your Company’s assets and income are a safe value for the money.  However you can address this concern in your business, the better chance you have of selling the business.

The other major hurdle is convincing them that your business operation is better than the others on the market.  You need to see who your competition is on the market because, be assured, that the buyer definitely is out there looking.  Your business is a product, maybe a very specific product, but a product with a sale price and perceived value.  Much of the perceived value is determined by what others are selling their businesses at.  The more educated you become of your competition then the better you will know how to present your business.  You need to evaluate other businesses for sale and be able to explain why your business is better/different than the others.   You might be surprised to see who is out there and adjust your price accordingly.

If you can validate your price and prove you are better than the others on the market, then you have a much higher chance of finding one of those elusive buyers.   So go online and do research.  Ask your business broker to run comps and then learn about your competition.  Don’t expect your broker to know your business better then you do. You can represent your business better when you understand the differences.

Finally, target your buyer and think about how they will deal with each of these hurtles.  If your business industry, product or service is not unique and there are a ton of others out there selling right now, you will need to separate yourself from them somehow.  Know your price, your value, and competition and you are well on your way to selling your business.

This entry was posted on Monday, May 4th, 2009 at 12:22 am and is filed under Sell Your Business, Exit and Answers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.