Build Business Value – Before Selling A Business

I normally write about selling strategies, today, is no different. I'm sharing insights on how you can improve your success at selling a business. As you read this, try to take the buyers perspective.

We sold our home a few years ago. Like most home owners, we wanted to maximize the value of the property and increase our Return On Investment (ROI). We took the advice of our Realtor and invested in key areas of the home to make it stand out in the neighborhood. We replaced carpeting, updated appliances, painted the inside and outside and improved the landscaping. Our efforts paid off handsomely. The home sold quickly and we had several excellent offers.

Savvy business owners, who want to sell a business also want to maximize the business value. Business owners must improve the profit value of the business to make it attractive. Most business buyers are looking for businesses with significant potential and rising sales. Many of them are looking for turnkey operations they can operate for a profit. No one wants a business that doesn't have good operational systems unless they are looking for bargains. In some cases a business owner must improve several systems of the business to make it much more attractive to potential buyers. It is best to approach these areas well before posting the business for sale.

If we had attempted to sell our home before the improvements were completed, we would never have reached the high selling price we achieved. In outside sales, a salesperson must improve the looks and appeal of the service or the product they are selling. If we can't improve the value proposition, we won't be able to convince the buyer that our product or service is worth more than competitors. 

Business Systems Improve Sales Value

One of the reasons franchises sell for higher prices is the perception that success systems are in place. Look at Mc Donald's or my favorite hamburger place, In-N-Out. The hamburger system runs like clockwork and it is always a treat to savor the taste of a double, double hamburger. When you watch the people at an In-N-Out make the fries or the burgers, you know they have a well honed system. You also know the meal is freshly made to perfection.

If you plan to sell a business, there are key areas of buyer evaluation. Buyers are looking for Financial, Operational, Marketing and Sales systems that work seamlessly. One of the areas I want to point out is how a selling system can add significant buyer value.

If a business has a marketing and sales system that builds and strengthens customer relationships, it improves value. However, this can't be based on something that could leave after the business is sold. For example, if the business has a salesperson responsible for building and maintaining key accounts, a new owner may perceive this as a liability instead of an asset. However, if the business has a selling system that is supporting the salesperson, this is definitely an asset to the business. This transfers the value to an asset of the business to the selling system. The same is true with the production or operational systems of a business. Instead of listing a key employee who is the only one who knows how to run a complicated piece of equipment, a business seller would be wiser to invest in and promote a simple and efficient production system anyone can operate.

Selling Systems Will Enhance Business Value and Sales Value

Sometimes, when I show my sales workflow chart to customers, the first reaction is how complicated the workflow chart looks. However, after I explain the selling system is activated with the push of a button, they get very excited. Once they realize about 80 percent of the sales actions are automatic, they relax. It is the visualization exercise that helps prospects realize how easy sales automation and a selling workflow can improve business value.

Relating the systems simplification to sales activities and improved business building relationships makes my job easier. I’m always trying to find the visual example for simplification. Our prospects can relate to visual examples and stories when we share them. In my case, I often share a story of one very satisfied client who uses sales automation to perform what took him four hours of selling, in 30 minutes. This same client manages almost 10 times more customers than he did before. This story and others strengthen the value proposition to my prospect every time.

The next time you are working with a client, look at their situation from the buyers perspective. Look for ways to improve your position in the value proposition.

 

Steve Martinez President Selling Magic, LLC Toll free (877) 762-4423 Local call (951) 277-0080 www.sellingmagic.com

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