Let’s say you’re in the market to buy a house and you see one that looks appealing in the ad. What’s your first impression? How does it look on the outside? The inside? What about the location? The neighborhood?
Like your house, your business projects an image to potential buyers. When they come to see your business for the first time, your “curb appeal” can attract a buyer to your business—or cause them to walk away. How can you improve your curb appeal? Here’s a 3-step plan:
- Fix Your Leaky Faucets
Perhaps, like many other business owners, you started your business from scratch with one or two employees and now you have 20 people working for you. But do you have the appropriate HR infrastructure in place for that size of a company? Perhaps you even take pride in your informal management style, but it can prove to be a liability when it comes time to sell.
Make sure your human resources policies are at least as well documented as those of the company you hope will buy your business. Some basics to have in place:
- Written policies for employee benefits, travel and expense reimbursement,
- A written policy making it clear you forbid any form of harassment or discrimination,
- A written letter of employment for each staff member,
- A written non-compete agreement for key staff members,
- A written description of your bonus system
- Assemble Your How-To-Binder
When you go to buy a house, it will give you confidence if the owner has the instruction manuals for the appliances, information on where they were purchased, and who to call if one of them breaks down.
Similarly, when a potential buyer looks at your company, he wants to see that you have your business information in order. Documenting your office procedures, core processes, and other intellectual capital can help you attract more bidders and a higher price for your company, while also lowering the chance of the deal falling apart during diligence.
If you want to attract a buyer, your business needs a policy and procedures manual with instructions for basic functions, such as:
- Opening up in the morning and closing down at night,
- Forms and step-by-step instructions for routine tasks,
- Templates for key documents,
- Emergency numbers for service providers,
- Billing procedures for customers,
- How your company is positioned in the market and your marketing tools
- Document Your Intangibles
Intangibles for house buying might include: Is the house near good schools or daycare? How close is it to shopping, restaurants, recreation, work, etc.? Is it close to public transportation?
Your business also has intangible, often intellectual, assets that a potential buyer needs to be made aware of, such as:
- Any patents, trademarks, service marks, copyrights, etc.,
- Proprietary product formulations you’ve created,
- Your unique approach to creating and satisfying a new customer
As with selling a house, your company’s curb appeal can go a long way toward closing a deal.
If you know of someone who’s thinking of selling or buying a business and who might benefit from a complimentary, confidential, consultation, have them contact me directly at 813.299.7862, or firstname.lastname@example.org
By: Mike Ertel, Transworld M&A Advisors