In the glare of the spotlight, business owners, like star performers, must know their roles: the script and the story, as well as the other players and their parts.
The goal in both cases is to generate a particular response from the audience. Whether it’s rave reviews for the actors, or offers to buy the businesses for the owners, it’s all about the preparation leading up to the show.
The business owner's role in a sale
Before dressing up the company for its debut, make sure it is ready to share its best features, as well as its blemishes. All will become visible under the due-diligence spotlight. As in the classic tale, The Emperor's New Clothes, it doesn't take a rocket scientist to see what the cloth is really made of.
Buyers don't like surprises, and problems uncovered late in the process damage your integrity, and threaten the price and the deal. The more issues brought to the table and worked out in advance, the better the chance of a smooth closing.
Your role as the business owner is to be the source of information necessary to accurately assess your firm. Addressing the following issues will help maximize the value of the business, it will provide transparency to prospective buyers, and it will minimize the amount of time consumed by the sale process. This information will be the foundation of the script that will tell the story to your audience – the marketplace of buyers:
- Why is the business on the market? This is not only important from the buyer's prospective – an owner must have a sincere motivation to facilitate a smooth process.
- Are accounting procedures in place and easy to follow?
- Are profit and loss and balance sheets well prepared and clean?
- Are the facilities and equipment in good working condition? “Curb appeal” makes an impression. When someone walks in to a business establishment, they're looking at everything. An orderly and organized facility gives a good feel for how the business is run.
- Is intellectual property (if applicable) well documented and up to date?
- Is there an appropriate lease in place and is it transferable?
- Are customer contracts secure and transferable?
- Are there employee contracts? Are they well documented?
- Are operating procedures documented and in use?
- Are there outstanding legal or financial aspects that may hinder the sale?
- How is the business positioned in relation to the competition?
- What distinguishes the business from others in the same field?
- What services or products are offered that are unique?
- What niche is served?
- Are there areas for future growth?
- What makes the company's customer service superior?
The story
Once information gathering is complete and data is analyzed, a price range will be determined and a company profile will be formulated. This is the story about your business. It will be the marketing tool that articulates and presents the message about your company to the audience of buyers.
My conversation with myself
The script is made up of the individual pieces that tell the story. The following are individual items that will be pieced together by the prospective buyer in order to substantiate the story and justify the asking price:
