Building your business with selling in mind
Had enough of the business? Want a sea change or just see a change of industry on the horizon? Maybe the time is right to cash in on all your hard work.
Whatever, keep focussed on ‘the sale’ even if you aren’t planning to sell your business just yet.
That is the message from Spruiker Hire’s Desley Cowley, licensed shopping centre manager, speaker, trainer and facilitator.
“Whatever stage of business ownership you are currently in your ultimate goal of selling it for a profit should always factor in to the decisions you are making,” she said.
Ms Cowley has provided some vital tips for SME owners and how they should prepare for that day.
About to buy an existing business?
• Make some profit when you buy and aim to buy under market value.
Already in business and no intention of selling just yet?
• Your circumstances can change overnight. Don’t let the threat of risk stymy your business growth. Still, be ever mindful of the ‘urgent sale’ value of your business when making investments decisions.
Ready to sell your business?
• Expect the process to take 18 months to 2 years. Be prepared to stay optimistic and switched on for that long.
Factors to consider when buying, building, selling your business
Some factors to consider when buying, building and selling, that will affect the selling price of your business:
• Location – is your business in the best location? Would you/your buyer make more sales, more easily if your business was located elsewhere?
• Condition and age of fixtures, fittings and equipment – will you/your buyer need to replace or undertake major repairs/rebuilds to any of your fixtures, fittings or equipment in the next 18 months to 2 years?
• Staffing – are you and your family key personnel in operating the business? If you were taken out of the equation how many paid employees would the new owner realistically need to replace you? What would the wages bill be if they did? Make yourself redundant and prove the business can be profitable under management.
• Your earning potential elsewhere – opportunity cost. How much could you earn in that same time frame if you worked elsewhere?
• Timing – research the market to find out when the highest asking prices are achieved for your type of business. Your accountant or real estate agent may be able to assist here. Plan your sale to coincide around this time.
• Potential – buyers don’t pay for potential. They plan to make their profit on the sale of the business based on the ‘potential’ they can see to grow your business.
• Cash under the table? Wink wink, nudge nudge. Bring it out, declare it all, bank it all. You can’t have your cake and eat it too.
• Would it cost less for your buyer to start from scratch in competition with you than it is for them to buy your business?
Who is your target buyer?
Profile your ideal buyer and focus all of your marketing strategy on appealing to as many of their ‘type’ as you possibly can.
• focus your attention and don’t use a scattergun approach
Your ideal buyer may not be the one that buys but you will gain better traction from your marketing efforts when you focus on one target market.
Walk in their shoes
Put yourself in the shoes of your buyer. Imagine yourself responding to an ad to buy your business.
• What would you ask?
• What would you already be able to recognise about the business or its owner the minute you set foot in the door?
• What’s a realistic price for your business?
“Prepare a buyer’s information kit well before you list your business for sale and even before you are thinking of selling,” Ms Cowley said.
“If you wait until you are really tired and ready to get out, you’ll potentially be losing the opportunity to maximise the selling price of your business.”
About the author:
Desley Cowley is an independent licensed shopping centre manager, speaker, trainer and facilitator.
With almost 30 years' industry experience, she works with owners and developers to turn under-performing retail assets into strong and profitable community hubs and helps shopping centres and retailers source and train quality talent for events, promotions and sales activities.
Desley has developed Spruiker Hire to include a national online talent directory and training course to help retailers better compete with online marketers and also understand why it’s even more important in this technological age for them to create an awesome experience for their shoppers and community.
Desley is known for turning underperforming retail assets into vital and profitable community hubs that get better results through commitment to community and better use of shared retail spaces.
Hear more from Desley in her upcoming CCIQ e-workshop ‘Maximise your Retail Marketing’.
Click here to register for the CCIQ Partner webinar on February 4 using a real case study. (You can nominate your business for the case study. Details on the registration form for the webinar).