Important Tips You Must Know Before Selling Your Business
Whether you’re a serial entrepreneur or selling a lifelong business for retirement, there is always more to learn about the transaction of a business. No two sales are the same, and there are always key takeaways that differ from the last. As an organization that has partaken in a number of transactions, we have compiled a list of tips and tricks for business owners to remember when selling their businesses. At Tsetserra, we believe that buyers should not feel pressured into buying, and sellers should not feel pressured into selling. A transaction should create equal opportunity for both parties involved.
Develop Multiple Sources of Revenue
Many businesses are very good at one specific thing in particular. They may be exceptional at delivering a specific service or product, which is amazing. It’s a good idea to have one deliverable that is extremely reliable. However, to take your business to the next level before a sale, developing multiple forms of revenue is a great idea.
For instance, an ice cream store beloved by the community may invest in selling T-shirts, gift cards, or other additional products. A mini-golf course may start selling golf balls and other forms of gold apparel. Creating multiple sources of revenue will make your company not too over-reliant on any specific aspect of the business, and it will demonstrate that your business is multifaceted to potential buyers.
Additionally, arguably the best type of revenue to develop in your business model is recurring revenue. Investors love recurring revenues because they provide a sense of predictability and stability, allowing for investment in other areas of the company. If your company has the ability to create a subscription of any sort before beginning the sale process, it’s a worthwhile investment.
Don’t be Afraid to Start a New Chapter
It may be challenging to maintain consistency while balancing life with work, especially as a business owner. Most business owners encounter a period of stagnation with their businesses throughout their careers. There is value in understanding what made your company successful and reach its current level. However, it is even more powerful to understand when it is time to start a new chapter or your business, expand outward, and take it to the next level.
Utilizing seasonal marketing can be a useful tool when deciding when to pull the trigger on outward expansion. Depending on your business the most effective time can vary, but generally, the summer is the best time to move forward with starting a new chapter. The weather is warmer, the general population is in good spirits, and consumers tend to consume more during this time of year.
In order to effectively take advantage of a seasonal marketing push, sufficient preparation is needed. Below are different ideas to consider.
- What deals are you hoping to implement and how are you going to track their success?
- Remember that you may have varying lead times depending on the channel
- Revamping an outdated website — especially if you have a large online presence — can be extremely effective and worth the investment in rebranding.
Know What You Want, & Be Confident in that Decision
Although it feels like a given, committing to the sale of your business requires 100% confidence. Understanding what you want, and committing to the outcome will allow you to be definitive in your actions leading up to a sale.
For example, understanding your desired level of involvement after the sale is important. We know that many business owners desire to maintain involvement in the business that they built from the ground up, but most certainly a large number of firms do not consider this. Therefore, having an honest conversation with yourself about your goals in the sale process is beneficial, because it allows the opportunity to manifest your desired outcome more effectively.
Before thinking about selling your business, it may benefit you substantially to push for another expansion of your business via the lens of buyers. For example, generating multiple sources of revenue, rebranding your website, and making a seasonal marketing campaign are all strategic maneuvers that will benefit you in receiving a higher valuation. Investing in these aspects of your company 1-2 years before selling your business will prove to be a wise investment down the road. We hope you enjoyed some of these ideas and will implement them in practice moving forward.
Interested in selling your business? We provide a free market valuation of your business as well as additional resources and guidance about the process of selling your small business.