When business owners are preparing to sell their businesses, there are many ways they can make themselves attractive to buyers. As we represent many current and new business owners in Colorado, we have compiled the top five ways sellers can make themselves attractive to buyers. In Part 3 of our series we will focus on ‘Reputation.’ To read the full series, click here.

A business’s reputation is not only vital to the success of a business, but it also plays a crucial part in the business’s value when it comes time to sell. Despite this, many businesses tend to ignore the importance of reputation and focus more on revenue and growth. In truth, a business’s reputation is a major factor that a buyer evaluates when deciding to purchase a business.

What gives a business an appealing reputation? First, a strong market presence– having a strong market presence will give the buyer confidence that the business being sold is established. A company that has 3+ years of history is evidence to a buyer that the company is stable and has a strong revenue potential. Additionally, a business that is a leader in its industry or niche will command a higher listing price, since it is already very influential in the market.

It is important to recognize that a business’s reputation can fall to the owner of the business. If the owner is the “face” of the business and the business’s reputation is a direct result of the owner, this may cause issues for a buyer. It will make it harder for a buyer to transition the business if the previous owner was a focal point in the reputation for the business.

Lastly, positive online reviews are essential to a good business reputation. Bad reviews or public relations can lead to a decreased listing price and/or repel potential buyers.

All in all, having a strong business reputation is a major factor for buyers. A great reputation will result in increased activity on a listing and a higher listing price.

In our next issue we will explore the next important way a seller can become more attractive to a buyer: culture. Our next issue will be posted on Wednesday. To receive our newsletter with ongoing information for both buyers and sellers of businesses, click here.

Selling a business is a complicated manner. If you have additional questions, please contact one of our Colorado business brokers at 720.259.5099 or email us. You can also read more about our seller services at this link.

What does this mean for sellers?

Right now we are experiencing a seller’s market. There are many more qualified buyers searching for good business opportunities than good businesses available for sale. Over the next three years that will slowly start to flip, until we have a strong buyer’s market where many business owners will be competing for deal dollars. From a basic economic standpoint this means two things for business owners planning on selling in that market: 1. Sale prices will go down 2. Competition will increase and it will be harder to sell your business.

What does this mean for buyers? 

If you are in a position to buy a business or add-on an acquisition opportunity to your current operations, this time could be incredible for you. Buyers may be able to expand their business operations and overall value during this time through savvy acquisitions.

So what should I do?

If you own a business and you are thinking about selling in the next three to five years, don’t wait. Yes, it is true that you can price any company right and it will sell, in any market condition. However, if you want to avoid the unknowns of the potential decreases in valuation put your business on the market now. Just because you sell your business, does not mean you have to exit your business. You can construct employment or contract agreements that keep you involved and working for years after the sale. At the very least have a conversation with a professional advisor like a business broker, business attorney, or financial planner and begin planning today.

The Seller Tsunami is not something to fear, but simply something to plan for. The baby boomer generation will affect business sales. If you are worried about how the baby boomer generation will change your business value, start planning now. 

Transworld Business Advisors of Denver is a team of Denver business brokers that helps visionary entrepreneurs buy a business, sell a business, or grow a business through franchising. If you are interested in having a conversation about what your business is worth, or how to sell your business you can contact us via email or phone at 720-259-5099.