Maybe you’ve not yet thought about how to sell your small business. After working so hard to build your business into what it is today, it’s sometimes hard to imagine selling it. But there are many reasons why you may actually decide to sell your business. Perhaps you have finally reached the point where you want to retire, you have other projects you’d rather be working on or you’ve found yourself unable to continue running the company. Or, perhaps you’ve received an offer for it that just seems to good to turn away.
No matter the reason, though, selling your business may end up being the best decision you make. However, unless you are selling out of necessity, you’ll want to be cautious about when you do actually decide to make your move, as you want to make sure you are selling when the value of your business is at its highest so that it will yield the highest return.
Far too many people consider solely revenues as a way of determining business value, and while this is an important aspect of the valuation process, there are plenty of other factors to consider as well.
Marketing affects your business in so many ways, but one of the ways you may not have considered before is that it can actually dictate when is the right moment to sell your business. Consider the following ways marketing affects the timing of the sale of your business to know if the moment for you to move on has indeed arrived.
Today’s marketplace is all about branding. With so much competition, and so many different options for consumers to choose from, having something that helps you stand out from the crowd is a huge boost to any business.
Successful branding comes from great marketing. It requires a strategic approach to messaging and other communications, and it also comes from careful consideration of how you present your company to those on the outside.
Companies with strong brands not only make more money, but they will also be far more valuable when it comes time for a sale. Investors know that if they can take over a company with strong branding, they will be able to leverage this into future growth, much more so than if they were to acquire a relatively unknown company.
So, if you are wondering how to sell your small business, ask yourself how successful your branding efforts have been. Even if your company is making money, if you are still in the beginning stages of branding and are therefore relatively anonymous in the marketplace, it may be worth your while to avoid selling for some time so that when you do you can take full advantage of the added value and bargaining power a strong brand gives you.
Of course, this takes some time, so if you absolutely need to sell for one reason or another, this might not be an option. But for those with flexibility, waiting until your brand is well-positioned will end up being the smartest decision you can make.
Search Engine Success
One factor which will prove tremendously helpful in your journey to learn how to sell your small business, especially online businesses, is how well you are set up with search engines. The majority of traffic your website will get comes from organic search. So, being able to rank well for specific keywords in your market is a sign your business is poised for success.
And to do well with search engines, you need to do well with marketing. Getting to the top of search engine results pages for high-value keywords means attracting links to your site, which comes from a quality content marketing strategy.
There is a time lag with these strategies. It takes Google and other search engines some time to figure out what you are doing and to update their algorithms. If you are right in the beginning phase of a content marketing program designed to boost search engine performance, or if you are about to start one, you may want to wait to sell. If you do, you can use your success as a bargaining chip at the negotiations table.
On the other hand, if you’ve just finished a campaign and your website is performing well with search engines, now might be the perfect time to sell. Investors will see ghhyour position as something they can build upon for future success.
Sustainable Lead Generation
When you look at the different factors that go into determining the value of a business, you will notice that future growth prospects is a huge part of it. Appraisers will generally multiply your yearly revenue by 2.5 to get a starting point for negotiations, but then they will look at where the company is headed to come up with their final number. If it looks as though you are poised to grow, you can expect a higher valuation and offers.
This is where your marketing efforts become very valuable. One of the key functions of marketing is lead generation. If you are spreading your message through various different channels, whether digital or traditional, and are successfully reaching new customers (and the cost to acquire a new lead is reasonable), then this portrays your company as a healthy one that is poised for future success.
If investors look at your company and think it will be too hard or too expensive to grow, then you can expect lower asking prices, or you may not get any offers. Being at a point with your marketing efforts where you are sustainably and reliably generating new leads and sales prospects is a perfect time to sell the business. But before this point, you may want to wait to improve the offers you will eventually receive.
Last but not least, successful marketing is a sign of quality management practices. While marketing is usually thought of as just one arm of a company, it really requires an organization-wide approach to be successful. Everyone involved in the company must be aware of the messages you are trying to send and how business is being done, especially if you are working on building and maintaining a brand.
If your marketing approach is still a bit haphazard or misguided, that’s okay, but it might simply mean now is not the right time to sell. However, if your marketing plans are working well, this demonstrates the razor focus you need to make a business work, and this can play well with investors looking to make an offer.
Overall, marketing plays a huge role in helping you make the decisions on how to sell your small business. Timing the sale for when your marketing efforts are succeeding and producing results means you will receive a higher valuation and higher offers, rewarding you even further for all the hard work you put in to make your business a success.
About the author: Jock is the founder of an online brokerage service, Digital Exits, that specializes in the buying/selling and appraisal of online business. He works with business owners to help determine the value of their business, and he also advises people on when is the right moment to sell. His work can be found in Forbes, Entrepreneur, Business Insider and CNBC. Originally from Australia, Jock now lives full-time in the U.S.