4 Principles/Tips To Sell Your Business
Updated: Jan 31, 2021
There's always a risk-value equation. The higher the risk of ownership, the lower the value of the company; the lower the risk of ownership, the higher the value of the company. Anything you do that reduces risk increases value. A simple example is to have all of your clients in an up-to-date CRM program, market to them, measure the results.
Valuation does not equal transaction value. All business owners are operating on the understanding that a valuation represents the actual value of their business. It's not -- and it's essential to understand the difference between your business’ valuation and the transaction value of your company. The transaction value is what the right buyer will pay for the business at the right time. If it were just revenue and earnings, you couldn't explain companies like Snapchat, Twitter, and so many other startups with limited or no revenue and earnings that are worth billions. Many many buyers need to see your ad in order for the right one to step up.
Businesses are sold, not bought. For every business, at any time, there are multiple potential buyers. Each buyer will value your business uniquely. It's usually based on a factor that's related to how much more valuable their business will be after acquiring your business. It's important to understand what they value most so that you're positioned properly. Dive deep into the WHY someone wants to buy your business and make sure you put your best foot forward to those exact points.
The exit strategy is not about the exit, it’s about the strategy. You can't possibly know what your business is worth or where you're going to invest your time and money to make it worth more if you don't know who would buy you, why they would buy you, and what they value most.
These Four Principles are guiding concepts for you to build a business of great value.
Little adds that at the end of the day, selling a business is just like selling anything else. It really comes down to something quite simple: people talking to people.
When we get started with a client, we spend 30 days staging the business so that it looks right to the right buyer - & we dig in with the owner to find out his or her insights into why the business will be a great buy now - and in the future!