For most individuals who have shopped for a home, the experience of touring various homes is enlightening. There are invariably homes that we view that are over our home purchase budget. There are homes that are under our budget. And, there are homes that fall within our budgeted range. Typically those well above our budgeted range have more space, higher quality and more amenities than we’ve asked for or had even considered! Yet, we immediately start to dream of how amazing our lives would be if we were to live in a home like that. The homes that fall under our budget range, typically need work – if not a LOT of work. They may be filled with clutter or they haven’t been well maintained or cleaned in decades given the clutter, dirt, overgrowth, and broken or outdated appliances and fixtures that are so apparent. In touring a home like this, we shudder thinking of the amount of work we’d have to do to just make the home livable for us. Finally, homes within our budgeted range are often a mix of meeting most of our requirements, while also requiring a few repairs and upgrades. Regardless of the work before us, we can see ourselves making the house our home. As buyers, we’re willing to pay a reasonable asking price, as long as the amount of cleanup work is reasonable. If the amount of cleanup is excessive, our willingness to buy drops or our offer price drops.
If the amount of cleanup is excessive, our willingness to buy drops or our offer price drops.
This same strategy applies to buyers of businesses. If you’re hoping to sell your business and potentially retire on the proceeds of that sale, how well your business is run now will determine how much its sale will contribute to your retirement fund.
How well your business is run now will determine how much its sale will contribute to your retirement fund.
If your business is offering relevant and desired products and services; supporting a flexible remote, hybrid, and in-person environment; operating with well-constructed and documented procedures; upgrading and enhancing systems and facilities regularly; and engaging with your team to excite them and wow your customers, you’ve got a business others would love to have. If, on the other hand, your business is not regularly evaluating and adjusting your offerings, is not flexible in supporting a remote or hybrid work environment, does not document and review your systems or refresh your facilities, or engage with your team intentionally to support them so they will continue to support your customers well, your business isn’t as attractive to others. As a result, the price you’ll be offered for a business will no doubt be much less than you’d hoped.
As you consider the potential value of your business, view your business from the perspective of the buyer: How much additional time, effort, and money is it going to take for the buyer to move in and make your business their own? If your business enables others to dream of opportunities they’d never even considered before, your dedication to keeping your business ‘open house’ ready should net you strong offers. If your business causes others to envision an exhaustive list of ‘clean ups and fixes’ because your business isn’t ‘open house’ read, you won’t receive the strong offers you desire. If, on the other hand, your business is presentable but not Parade-of-Homes-ready, identify the items that are of most interest to prospective buyers and do what you can to minimize a potential buyer’s hesitation: Cluttered Products and Services Offerings? Clean them up. Outdated systems? Upgrade where it makes sense and retire the outdated. Messy documentation or facilities? Declutter and clean them up. Disengaged Employees or Limited Team Depth? Start delegating, sharing knowledge, and developing others to be key players for prospective buyers.
The more open house ready you prepare your business to be, the more money you’ll realize when it becomes someone ‘home’.
Copyright MMXXI – Liz Weber, CMC, CSP – Weber Business Services, LLC – www.WBSLLC.com +1.717.597.8890
Liz supports clients with strategic and succession planning, as well as leadership training and executive coaching. Learn more about Liz on LinkedIn!