Look at Your Business From a Buyers Point of View

All business owners know that when they are selling their products they must look at the transaction from the buyer’s point of view. They must make their service or product appealing to the buyer.

Yet when they proceed to sell their business they forget this basic premise. By not generating top profits and meeting prospective buyer’s other desires, business owners loose precious sales value.

Lets look at selling your business as if we were selling chocolate cake. A customer enters the bakery with the intention of purchasing a beautiful cake. They see a wonderful chocolate cake on display. Next to that cake is another cake just like it, except this one is cut in half, displaying the moist inner layers of chocolate and fudge. The whole cake could easily sell for $45.00 or more.

Now, imagine the same cake with a huge chunk simply broken off of it. How much is the cake now worth?

Very little has changed about the cake. Probably 95% of the cake is untouched. But a customer would be unlikely to pay $42.75 for it. (95% of $45.00)

Yet, when owners sell their business, they think damaged goods should sell for 95% of full price. The key point is that a few surface issues with a business can greatly decrease its value. If these problems revolve around profitability, value will plummet.

In just a few years, poor results can wipe out the value of a business that has been painstakingly built over many years. All the more reason to sell while your business while it is still going strong.

Slight increases in perceived buyer risk, slight reductions in profits – both can cause big swings in your business value. Therefore, it is important to ensure that your business is running on all cylinders when you prepare to sell. Buyers, as a rule, are merciless about paying full price for a distressed business.

To maximize your sales price, visualize your business sale from the buyer’s point of view. Make sure all your assets show well and your business is profitable. Get full value from your business.

If you are concerned about how your business might stack up feel free to contact us at Harvest Associates for a free consultation about your business and your future.

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