Selling Your Business Without a Growth Plan is Like Selling a Home You Never Loved

October 20, 2013 by
Filed under: Business Growth, Profitable Growth, Uncategorized 

I’m selling my company; why does it need a growth plan? Whenever I hear owners say this, it’s clear they want out and want the highest price; which is their prerogative. But, after investing in it for years, why won’t an owner do the last thing and make his or her business the most attractive to buyers willing to pay the highest price? Because some owners believe: 

 

  • Buyers only pay for customers, machines and methods. 

  • Investing more is throwing good money after bad. 

  • Your company either profitably grows or is sold says small business growth consultant Andy Birol.

    If they can’t grow their business, why should they pay and help a buyer to do so? 

 

In real estate it’s said, “Sellers pay for repairs but buyers pay for value. And who better to describe the value and the unrealized potential when selling their company than its current owner? But doing so requires the owner to have the: 

 

  • Courage to admit to buyers he or she couldn’t adequately grow their business but someone else can. 

  • Foresight to make one last investment that could as much as “DOUBLE” the price of the firm. 

  • Self-confidence to emotionally divest themselves of their business and accept their legacy “as is”. 

 

Create a Growth Plan to Increase Your Company’s Curb Appeal and It Will Sell for More. 

 

Whenever financial advisors and business brokers sell a business, they always look for “strategic buyers” who will pay more for a business. Strategic buyers buy a business for its potential, not what it is worth now. But traditional business buyers offer a seller a price only based on the value of a firm’s assets, it’s customers, and a multiple of EBIDTA (Earnings Before Interest, Depreciation, Taxes and Amortization.) But these measures alone don’t reveal the strategic potential of a business. A growth plan will increase the full potential of a business when it: 

 

  • Identifies the business’ Best and Highest Use and how it can be exploited. 

  • Describes the firm’s target markets and their current and emerging buying behavior. 

  • Defines new products, services, and value the customer will pay for beyond what they do today. 

  • Provides insight on how to sell and market these new services and products. 

 

In sum, the better a seller can tell his story and sell her vision; the more a buyer will pay. The candor of a seller who shares his vision and admits he or she’s not the one to execute it, adds priceless credibility to a higher price. I’ve watched many clients invest in a growth plan and then sell their businesses for millions more than they otherwise would have. My client, Garland Floor is a great example. So if its time for you to sell your business, give your business and its buyer the best opportunity to grow it into all it can become. And you will be rewarded for doing so with a higher price. 

 

 

 


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Comments

3 Comments on Selling Your Business Without a Growth Plan is Like Selling a Home You Never Loved

  1. Barbara Semeniuk on Fri, 25th Oct 2013 12:17 am
  2. Dear Andy:

    Great content on your site! Thanks for coaching me! Hope you and yours are all doing well. Am growing my business…used consultants to do the work when I was ill and prevented bankruptcy.

    Barb Semeniuk

  3. Andy Birol on Fri, 25th Oct 2013 10:12 am
  4. Barb, thanks for your kudos and I am so glad you are on the mend. It’s a great consultant who recognizes when they need outside help.

    Keep me posted on all your good news. Family and biz are well in Pittsburgh.

    Best regards,

    Andy

  5. Selling A Business With Employees on Tue, 3rd Dec 2013 2:51 am
  6. Great article Andy. The points you made will definitely help increase the prospects of selling the business

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