When I write up marketing materials for a new listing, I think about what it’s like to be a hopeful investor – I was one once too! You look through one business listing after another, reading one prospectus after another, trying to find the business that really catches your attention. You want something with a good foundation, yet lots of potential to grow. You want a business that will challenge you, yet use your particular skills, contacts, and prior experience in a profitable and fun way.
Each business needs a very particular kind of buyer to make a great match and to be a great buy – a business that would be great under one person will crash and burn under another. A business buyer wants to know that they’re making a smart investment in something that will succeed and grow.
So it’s one thing to find a great business that will thrive under your ownership, and another to decide what you’re willing to pay for it. From the seller’s perspective, there is a frequent assumption that a buyer who doesn’t want to pay a high price for their business just doesn’t see the growth possibilities. That silly buyer must be blind to the fat stacks of cash this business is definitely 100% going to make for them! As a seller, this business is your baby, and even when you are in the midst of selling, you hate hearing someone else doubt its potential.
But while they may be very excited about all the things they can do with their new business, every buyer wants to feel they’ve made a smart move and a good investment – that even if they fail to follow through on their starry-eyed dreams of global expansion (or what have you) they’ll still get their money back. This is what I call “buying hope but paying for reality”. If you find a business with great growth potential that you think will really take off, you’re hoping that you’ll do better than the seller did – but you also don’t want to assume that you will and leave yourself in the lurch if it doesn’t quite get there.
This is where smart pricing and good marketing materials come in. As a broker, it’s my job to assess not only what your business is doing now in terms of revenue and profit, but also what it could do in the future. I look at your current models and determine if there’s ways to trim the fat that a new owner could take advantage of, compile simple ways to increase revenue, and research expansion opportunities. Combining these potential moneymakers with what the business currently makes helps me set a price that buyers won’t flinch at, but will get you more than a straight and narrow analysis of current profits. Then, good marketing materials help show the buyer what they’re getting for their money.
At the end of the day, my goal is to make sure everyone’s happy – you’ve gotten a fair price, the buyer’s gotten an awesome business, and I get a nice glass of something and bask in all the happiness.