8 Ways to Make Your Business Attractive to Buyers When Listing It for Sale

When it comes to selling your business, it is helpful to know that there are varying degrees of success. Simply listing your company for sale is no guarantee you will achieve the best deal possible. In order to maximize your exit, it’s important to know how to make your business attractive to buyers when listing it for sale. By doing so, you will bring more interested parties to the table, helping to increase competition and put you in the driver’s seat.

In this article, we discuss how an attractive business can help you achieve a more successful exit. We then break down eight things you can do to make your business more attractive to buyers, including:

• Getting organized
• Improving your systems and processes
• Timing your exit right
• Leaving room to grow
• Not listing your business for sale right after making big changes
• Being able to explain your business’s weaknesses
• Enlisting the help of an experienced business Advisor
• Mitigating risk as much as possible

Related Article: Seven Things Buyers Look For When Buying a Business

How an Attractive Business Can Help You Achieve a More Successful Exit

Before we jump into the specific things you can do to make your business more attractive, let’s take a look at how building an attractive business can help you achieve a more successful sale.

Create a competitive sale process

It all comes down to creating a more competitive selling environment. As your business becomes more attractive compared to other listed businesses, more buyers will show interest in buying your business. When you have more potential buyers, they will be forced to compete with each other to win your business. More buyer competition ultimately puts you in the driver’s seat as the seller.

If you have multiple buyers, you will be better positioned to attract higher offers, negotiate better deal terms, and achieve an easier exit process.

“More buyer competition ultimately puts you in the driver’s seat as the seller.”

Higher sale price

A competitive bidding process leads to a higher sale price. In their effort to beat other potential buyers, each bidder will be incentivized to make a higher offer. Ultimately, an attractive business can help you achieve a higher sale price and a more profitable exit.

Better deal terms

The final sale price is not the only measure of a successful sale. Not all exits are structured the same. The specific deal terms that you and the potential buyer agree to have a large impact on your post-sale experience.

By attracting more buyers and creating a competitive sale process, you can be more effective when negotiating deal terms. Being in the driver’s seat during negotiations allows you to drive harder for the terms you want. If a buyer doesn’t meet your requests, you have many more potential buyers to choose from.

Easier exit process

As we will see, an attractive business is an organized and streamlined business. The sale process can be a challenging journey; a lot of detail goes into getting it right. Often, selling a business can be quite stressful for the owner as well as the buyer.

The more attractive and organized your business is, the easier your exit journey should be. This will save you a ton of time, energy, and stress throughout the selling process.

Now that we have an idea of how an attractive business can help you achieve a more successful sale, let’s take a look at some of the ways you can make your business more attractive.

“The more attractive and organized your business is, the easier your exit journey should be.”

1. Get Organized

As we mentioned, an organized business is an attractive business. Put yourself in a buyer’s shoes for a second. Would you prefer to buy a business that has all of its documentation and operations organized or one that flies by the seat of its pants and has no cohesive organization? If all else is equal, the answer is pretty clear.

If your business is not organized already, take some time to do so. This includes creating professional accounting and financial records using accrual accounting methods. You may want to hire a professional business accountant to get your books in order.

Make sure all of your other documentation is organized as well. This could include but is not limited to:

• Supplier and vendor communications
• Marketing materials
• Internal notes and communications
• Contacts
• Inventory (if you manage your own inventory)

2. Improve Your Systems and Processes

The more systematized and streamlined your business is, the more attractive it will be to prospective buyers. Before you list your business for sale, take some time to improve your systems and processes.

Establish standard operating procedures

For starters, establish and document effective standard operating procedures, or SOPs. SOPs act as the operating manual for your business. Clear SOPs make it much easier for a new owner to take over and run your business successfully. While it can take some time and effort to create SOPs, the effort will be worth the payout when you successfully sell your business.

Hire teams to automate your operations

Another great way to streamline your operations is to hire individuals or teams to handle day-to-day tasks. This could include hiring a marketing professional, personal assistant, product manager, and more. While this will increase costs, it will reduce your time commitment to the business. A business with minimal time requirements for the owner is more attractive than one that requires long hours.

“The more systematized and streamlined your business is, the more attractive it will be to prospective buyers.”

3. Time Your Exit Right

Timing plays a large role in the overall success of your exit in several key ways. For starters, try to sell during a period of business growth. Strong growth trends demonstrate likely future growth, making your business more attractive to potential business buyers.

Internal growth trends are not the only growth trends that matter. If the economy as a whole, or your industry in particular, is growing, it will make your business more appealing to buyers. Unfortunately, the opposite is also true. So while you can’t control the economy any more than you can control the weather, if you can wait to sell during a period of industry growth, it may pay to do so.

Getting the timing right may not be possible for every business owner. You could be forced to sell at a suboptimal time for a number of reasons. If this is the case for you, it doesn’t doom you to failure. But if you do have the luxury of choosing your exit time, playing your cards right can help to make your business more attractive to buyers.

4. Leave Room to Grow

Most potential buyers look for businesses that they feel confident can grow into the future. While past and current growth trends offer some guidance on future performance, they don’t tell the whole story. An astute buyer will look to see whether your business has any clear opportunities for future growth.

This could include being positioned to launch new products or services that are complementary to your current offerings. Or, perhaps your business has the opportunity to add additional untapped marketing channels. If you’ve relied solely on paid advertising for the bulk of your revenue, launching content marketing or affiliate marketing channels could lead to strong future growth.

By highlighting areas for strong future growth, you can attract more buyers for your business and achieve a more profitable sale.

“An astute buyer will look to see whether your business has any clear opportunities for future growth.”

5. Don’t List Your Business for Sale Right after Making Big Changes

Before listing a business for sale, most business owners take time to optimize their business operations first. Unless your business is already in tip-top shape, you will likely need to make some changes to prepare your business for the market.

While these changes can increase the value of your business and lead to a more successful sale, it is important to consider your timing. Specifically, make sure you don’t list your business right after making any big changes.

It takes time for most big changes to have a material impact on your business. For example, if you implement a new content marketing plan, it may not bear fruit for at least several months. If you list your business too soon after making the change, it won’t have sufficient time to demonstrate a positive business impact for potential buyers.

At the same time, certain changes could have the potential to hurt operations. A prospective buyer may be a bit wary of buying your business if they know large changes have been made recently, without having sufficient time to see how they shake out.

For these reasons, it is best to list your business at least six months after making any significant changes. This is sufficient time for most benefits to start showing up. This can help to instill confidence in prospective buyers and make your business more attractive.

6. Be Able to Explain Your Business’s Weaknesses

It’s natural to focus on your business’s strengths when thinking about making it more attractive to potential buyers. However, even the strongest businesses have weaknesses. Any experienced buyer will take a close look at your business’s weaknesses before making a buying decision. How you handle those weaknesses will influence the overall success of your exit.

For starters, don’t try to hide weaknesses. First, it is the wrong thing to do. An astute buyer will also be able to identify them upon closer inspection. If they feel you have been dishonest, it could torpedo the whole deal. At best, it makes completing the deal much harder. From the get-go, be honest and up front about your business’s weaknesses.

You should also be able to clearly explain any weaknesses. Do your research and be prepared to explain them in a clear, direct, and cohesive way. If you can’t, buyers will be wary. For example, if sales have declined and you don’t know why, it would be natural for a buyer to be worried. If you can explain that it is due to recent Google algorithm updates and your business has weathered many such events in the past, buyers will be less fearful.

“From the get-go, be honest and up front about your business’s weaknesses.”

7. Enlist the Help of an Experienced Business Advisor

Having the right help on your side can make or break a successful exit. A business Advisor, or business broker, is a professional who specializes in selling businesses. By choosing an Advisor with a proven track record, you make your business more attractive to prospective buyers.

In addition, the right Advisor will allow you to access an extensive list of qualified buyers. This will help you attract interest and reach the best buyers available, increasing competition for your business. When it comes to selling a business, buyer quality is at least as important as quantity.

8. Mitigate Risk as Much as Possible

As a business owner, you know that running a business entails some risk. The riskier your business is, however, the less attractive it will be to potential buyers. Before listing your business, take time to go through your operations and eliminate risk wherever possible.

In general, risk comes from any part of your business’s success resting on a single point of failure. This could include relying on one product or one marketing channel. By diversifying your operations, you reduce risk.

At the same time, evaluate potential legal risks your business could encounter. Could you face any patent infringement issues? Is your legal documentation up to date and in good order? Identify issues, make a plan, and take the appropriate steps to address unnecessary risks.