There is no perfect business in the world. There are always some problems in the market deal. To have a good understanding of problems and make early preparations can help to better solve the problems and sell the business at a high price.
Five unfavorable factors the business buyer shall pay attention to:
- A lot of inventory to be taken over
- Receivables to be taken over
- The management of company relying on “key staff” or business owner
- Long operation time
- Relying on key product or key client
Maybe there will be at least one or two of the above “unfavorable factors” in your business. It is only necessary for you make some changes for them to make it more smooth to sell your business and achieve a result that satisfies both the buyer and the seller.
For instance, recently a large uniform distributor, with favorable profitability, wanted to sell the business at a reasonable price, but it had inventory, worth $850,000, and $200,000 of receivables. Besides, the business had been operated for 35 years under owner’s name, and the business owner played an important role to the business. The business owner made two changes: to reduce inventories and receivables, and to rename the enterprise. At last, the business was sold at a price as required by the seller, and the buyer was very satisfied with the business operation after the takeover.
Five changes shall be made by the seller to raise the price of business
- Trying to control the inventory to keep it at the lowest level that can ensure the sustainable operation.
- Controlling the receivables to keep them at the lowest level
- The enterprise “managed by staffs” has more market value than that “managed by the enterprise owner”.
- In case of a long operation time, please make sure that the operation is effective and will not cause problems.
- Please make sure that your company does not rely too much on a certain employee, certain products, or certain clients.
The buyers always mind these “unfavorable factors”. However, you can reassure the buyer and get your company sold successfully once you have realized the problems and controlled these factors.