Creating Your Formula For Selling a Small Business

Creating Your Formula For Selling a Small Business

Focusing On The Numbers

Understanding The Buyers Mentality (Part 1 of 3)

Most business owners see their business through tinted glasses…a point of view originating from a deep understanding of what their business is and all that has been achieved.  This is understandable but it sets the stage for one of the common reasons for business sale failure.  Simply put, no buyer can ever or will ever be able to share the depth of knowledge and passion that the owner has.  They come to your business with a very different frame of mind and it’s your job to understand it if you want to successfully create your formula for selling a small business.

There is a simple way if you are a business owner to put yourself in the right frame of mind.  Remember any time you’ve made a significant investment or purchase.  I’m willing to bet in that circumstance you were very cautious.  I’m sure you thought about all the ways the investment or purchase might not work out.  I’m guessing you spent a lot of time thinking through how you would do your purchase or investment to ensure that you didn’t lose money.  In short, you acted just the way a buyer is going to look at your business!

When a buyer, any buyer, approaches a deal, they will be making a major investment.  They will be worried about how it might not work out.  They will think a lot about how to ensure they don’t lose money. If you understand this mentality, you can use it to your advantage.  You can take off those tinted glasses and start looking at your business like an outsider would.

One of the primary tools we have to offset the buyer, fear-of-loss mentality is the use of and integration of metrics and empirical data into our business management.  You can have all the opinions you want but when you have numbers and data to back you up it is no longer opinion.  In my next two posts, I am going to discuss what types of numbers you should be focusing on (Part 2) and how to use those numbers to get the outcomes you want (Part 3).