August 6, 2020 is a daily online magazine covering small business news. We help entrepreneurs transform ideas and innovations into greatness.

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Selling a Business


Five Tips for Maximizing Your Business Sale Price

Just as you market your products and services to attract customers, it's important to market you business in a way that maximizes its value in the eyes of prospective buyers. Here are a few tips for getting a great price when you sell a business.

Think you know what your business is worth?
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There's no guarantee that you'll get what your business is worth when it comes time to sell it in the open market.

But with the right strategy, you can sell your business for what it's worth - and then some. To help you get started, here are five tips for maximizing the sale price of your company.

Have a Plan for Selling Your Business

Theoretically, selling a business would seem to be a lot like selling a home. You decide to sell, find an agent, put it on the market, and voila! - a buyer magically appears. In reality, selling a business and selling a home are two completely different things. To avoid being shortchanged, you need to start your preparations twelve to eighteen months in advance with a comprehensive timeline for due diligence preparations, the valuation process, and a marketing plan.

Create a Broad Customer Base

What's more attractive to potential buyers: A business with 100 customers, each representing 1% of the company's sales or a business with 1 customer representing 100% of the company's revenue? If your company relies heavily on a few key clients to make ends meet, you should consider making a concerted effort to attract new customers prior to the sale. A broad customer base means greater security for buyers, and in most cases buyers are willing to pay a little extra for the peace of mind that comes from knowing that the business won't fold if they lose one or two existing clients.

Book Contract Income

Guaranteed income streams are always more attractive to potential buyers than sales forecasts. If your business lends itself to the possibility of contracted income streams such as licensing fees, retainers, or other contractual arrangements, you should make a concerted push to lock-in clients before putting your business on the market. The result is increased leverage during the negotiation phase because instead of dealing with possible income figures, you're dealing with hard numbers.

Seek Professional Assistance

Although it's possible to sell your business without any professional assistance, a do-it-yourself approach is one of the surest ways to leave money on the table. For good reason, buyers have more confidence in financials prepared by a professional accountant, appraisals performed by a professional appraiser, and legal documents prepared by a professional attorney. You may also want to consider enlisting the help of professionals in preparing your business for sale and marketing it potential buyers.

Be Patient When Selling a Business

If you need a quick sale, there's a good chance you won't get top dollar for your business. It's not unusual for businesses to be on the market for months or even years before the right buyer comes along. However, if the process drags on too long, you may eventually need to weigh the decision to hold out for top dollar against the cost of holding on to the business for another six months or more.

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