It's not easy these days with lack of financing but it's still possible. I see a flight to quality by business buyers. Good businesses still command a decent multiple of their earnings.
Successfully Selling a Business When Times Are Tough
Believe it or not, a down market isn’t necessarily a bad time to sell. Investors and potential business owners see this slowdown as a golden opportunity. Getting the best price for your business will require some creativity and planning.
Pick up any newspaper and you'll find stories about the weakening economy. Foreclosures are increasing, unemployment rate is skyrocketing, and the stock market is down. Some may consider this a doomsday situation. Believe it or not, a down market isn't necessarily a bad time to sell. Many investors and potential business owners see this slowdown as a golden opportunity. Experienced business buyers look to buy businesses in time of economic uncertainty, in the hope of realizing a good profit by the time they decide to sell. Getting the best price for your business will require some creativity and planning. You will need to remember some things as you try to sell a business when selling in a recession.
Maintain Perspective: A natural instinct during a time of economic downturn is to think that selling your business will be difficult, maybe even impossible. Don't allow yourself to get sucked in by the negative hype about the economy. There are always quality prospects that want and need your products & services. Your job is to find them. In a down market, many business buyers encounter a hurdle obtaining financing for larger acquisitions. Smaller companies with good foundations, solid growth plans, and good prospects are compelling.
Keep Your Business Sellable: It is very important to not let your business go when you've decided to put it on the market. Focus on long-term growth and profitability in order to catch buyers' eyes and hold their attention. It is always easier to sell a business that is exhibiting either growth and/or stable financial performance. Buyers generally want to invest in a company that will provide them with a good return on their investment and are willing to pay more for a business that has a positive trend and outlook. How can you do this?
- Focus Employees on Creating Positive Customer Transactions - In difficult times, companies don't get a second chance to make a good impression on their customers.
- Ensure Your Customer Feels Valued - Value a customer not just for their money, but for who they are. Make sure your company is addressing your customers' need for a strong sense of belonging and significance.
- Set Your Customer Expectations - You want to guarantee that your customers are never disappointed. Use your company's unique selling point to shape up their expectations.
- Ensure Employees Understand Company's Values - If your employees understand what your company stands for and is trying to accomplish, then they will accomplish it. This is important to remember as owners train managers who train employees and so on.
- Evaluate How Cutting Costs Affects Customers - Never cut quality. A company lives or dies by its reputation.
Continue to Spend Money on Advertising - Where competitors are cutting, you should be spending more. Don't be like your competitors and lose more in sales than saved in marketing. With more ad space and cheaper prices, it gives your company a chance to stand out. Be aggressive and take advantage of reduced media rates. As well, make a conscious effort to target your competitor's best customers.
Get Rid of All Clutter: Do not store any unnecessary clutter. Your clutter may lead to buyers thinking that you manage your business in an unorganized manner that could leave them worried.
Have a Current Valuation: It's important to have your business valuated and to know what it's worth, especially in an unpredictable market. If you have a firm grasp of your company's value, you can better negotiate to suit your needs as well as the company's.
Line Up the Experts: Find yourself a great lawyer. Work with an investment bank or a business broker in your area. You can avoid the headaches of finding appropriate buyers. The negotiations may get tough, use their expertise in your favor.
Remember to be prepared and be patient! During a recession, deals are likely to take longer as buyers are more selective with their funds. Have a top-notch business plan written and financial and legal documents ready. Work with the right people and know what you're worth. This will expedite the process of selling your business.
Learn more about the author, Lauren Michitsch.
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