- How to prepare your business to attract buyers
- What to do to locate the ideal buyers for your business
- How to build a marketing strategy to sell your business
- Tips to ensure the sale moves smoothly and swiftly
No matter what you’re selling, marketing is your biggest ally. Same goes for selling a business. But many businesses fail to sell at the right price because they weren't marketed properly. In fact, only 30 to 40% of the businesses put up for sale are successfully sold.
Like product marketing, marketing your business for sale mainly revolves around the proper implementation of the 4 Ps of marketing: price, place, product, and promotion.
For price, there’s the problem of not setting the right amount. This happens because most owners have not got their business valuation in the last three or more years.
Pricing is just one of the many factors that impact the overall marketing effort. As a business owner, you must know who your buyers are, where you can find them, and what they expect from you. You can only answer these questions if you know your business and market.
In this article, we’ll show how to position your business for sale in the market, attract the right buyer, and get paid the right price.
Why Do You Want To Sell Your Business?
This is the first question to answer in your marketing effort.
You need to be sure your answer isn’t non-profitability. The potential buyer of your business will certainly be interested in knowing why the present owners are leaving the business.
After all, who wants to buy a business that can’t make money?
Therefore, define the reason you want to sell your business — loud and clear. When you’re having a meeting with a prospective buyer, you have to justify why you’re letting go.
The most common reasons business owners sell their businesses are:
- The health of owners/directors
- To get cash for a number of reasons
- Shifting to another business niche or industry, or
- The business value is enough to fund your future lifestyle
Yours may be different. Whatever it is, answer it before you market your business for sale.
Which Business Do You Want To Sell?
A business owner who wants to sell his business must understand the technicalities of each business type. The business size and scope decide what buyers it will attract.
Therefore, you should identify your business size and scope before jumping to marketing strategy.
Most generally, your business will fall into either of the following types: small, medium, and large. Each of the business types attracts different buyers. Knowing your business size and scope will help you target the right buyers and for the right price.
A small business is one with a sale value of around $2 million or less. Such sales usually go well if you work with an intermediary who will manage the sale for you via business for sale listings.
You won’t have to put much effort into marketing by yourself. A simple ad will run on the listing website. You will add some photos of your business, let’s say a restaurant, a brief one-page summary, and you’re ready to put your business for sale.
The mid-sized businesses mostly sell between $2 million to $100 million. The market of the business will be larger than that of a small business.
The business details you will need to disclose will be more detailed in a medium company. For instance, you will disclose your target market, competition, product line, why you are selling your business, business culture, etc.
The selling process gets a bit complicated as private equity groups, and other businesses are usually attracted to mid-sized businesses. Your prospective buyer can be local or international.
To attract your buyers, you could rely on networking. Business-for-sale listings are still relevant as well. The most typical intermediary for selling your medium-sized business is a merger and acquisition firm.
Large companies do not attract acquisition entrepreneurs or individual buyers, unlike small and mid-sized businesses.
A specialized broker deals with large businesses and will approach the prospective buyers from their listings. You will not have to do a rigorous marketing campaign to sell a large business because the investment bankers or specialized brokers will do the most work.
The information disclosure of large companies is usually available to the general public.
How To Market Your Business For Sales?
Medium-sized businesses usually have to put in the most effort into the marketing campaigns for selling the business. Small businesses usually sell through web listings.
After answering the above questions, you are now ready to work on marketing your business:
Define your target buyers
When you’ve answered the first two questions in this blog post, it’ll be easier to identify your prospective buyers.
Defining your target buyers is important because only then will you be able to create a strategy to attract the buyers. Generally, there are three types of business buyers:
- Individual, and
The individual buyers are usually looking for a business to equate their 9 to 5 jobs. Therefore, such buyers usually prefer a business with a portion financed by the seller. Similarly, the financial buyers look at your business as an investment and think of return on investment. Such buyers focus on the risk-reward metric of a prospective purchase.
The strategic buyers evaluate your business at a different level and approach. Such buyers usually run their own companies and want to purchase a business to integrate into their existing business. Such buyers can be your competitors, suppliers, or even customers.
You will get a perspective on different buyer personas who might be interested in buying your business. The next step is defining a marketing strategy.
Define your marketing strategy
Your marketing strategy is not an output of one or two factors. Instead, your marketing strategy for selling a business relies on a dozen factors. It is the amalgam of the marketing Ps (as we talked about earlier).
It will consider all the factors already discussed: buyer personas, business size, industry, target buyers, any industry-specific approach, etc. Remember all the perspectives when defining your marketing approach or strategy.
You will answer questions like
- Who are my ideal buyers?
- Where can I find that class of buyers?
- Do I want to sell my business to investor groups or individual buyers?
In short, get into the prospective buyer’s shoes and get your hands dirty on the marketing strategy. Meet your ideal buyer where they are.
Choose the marketing channels
Fish where the fish are. That cliche emphasizes being accessible to your prospective buyers.
When you have found who your ideal buyers are, it’s time to target them. You will get competitive pricing if you have a pool of buyers. It is only possible when you target your buyers where they’re in a crowd.
You can hire brokers to sell your small business or mid-sized company. The brokers connect you with qualified buyers, and you can proceed with the process of selling.
Large businesses hire specialized brokers to sell their businesses –usually investment bankers, financial institutions, etc.
Online Listings and business-for-sale sites
Numerous online listings and business-for-sale websites operate and help connect buyers and sellers. The online listings are ideal for small business owners.
There is no extensive marketing, writing ads, or pitching –all you have to do is write a one-page summary of your business, and you are good to go. For example, BizBuySell.
Networking is a valuable skill, but not every business owner is not good at it. It usually suits mid-sized companies the most. It is because buyers of medium businesses are mostly competitors, suppliers, customers, etc.
However, a business owner looking to sell out of his network can rely on the network of specialized brokers and institutions.
At Acquira, we have a pool of qualified buyers for different businesses. The well-trained buyers look at your business as an opportunity and will put it on the path of growth and innovation.
Start by preparing your sales pitch. Think of what your buyer will be most concerned about. Pinpoint and highlight the relevant characteristics of your business. Highlight your mission, vision, and objectives. It will help buyers to resonate with your ideas, and it will drive your marketing home.
While pitching your business, pay attention to communication and openness. The business relationship that might build between you and the prospective buyer stands on the foundation of mutual trust. Communicate often and be open to your potential buyers.
Tips to Market Your Business for Sale Effectively
Before a real estate owner puts up a property for sale, they stage it to attract prospective buyers. Similarly, if you want to market your business effectively, the following tips will help a lot:
- Work on your exit strategy: Plan to exit so you’ll put all necessary things in place for the D-day.
- Hire a broker: You don’t have to do this yourself. Get help from a professional. With Acquira, you don’t just get a broker, you get all the assistance you need — accountant and legal counsel included.
- Keep your business financial information up-to-date: Buyers will want to look at your books. If everything isn’t in order, they sense it as a red flag.
- Highlight pros for a buyer buying your business: They don’t know what you know; show them. Mention why buying your business is a smart financial decision, including those perks most people don’t notice.
Acquira is a business acquisition in a box service. We help entrepreneurs buy businesses and we invest in them and their chosen businesses. We are here to help ensure that each business we work with is posed to make the biggest positive impact possible for its owners, employees, and community.