Selling your business
When selling your business, it is critical to think from a buyers’ perspective.
How a potential buyer looks at a business is an evaluation on the basis they can replicate the business model to continue making profits in future years.
Potential buyers will ask about the customer acquisition process. They will need to be assured that the current business owners don’t personally generate all the income.
Therefore, having a good marketing and sales systems that can be demonstrated to win new clients is essential for a good valuation.
Small businesses often market in an ad hoc manner and fail to measure the success of their activities.
As is a good marketing plan, comprehensive sales and marketing forecasts, lead generation, conversion and churn rates is a great asset to have when negotiating a business sale.
A marketing plan should encompass market research, marketing objectives, marketing strategies and monitoring and control processes.
Fundamental to a successful marketing plan is understanding the needs of the business’s customer base. This includes characteristics such as gender, aspirations and an ability to pay.
A marketing plan needs to outline the size of the market, where it is located, and how it is being impacted by technology, attitudes and social and economic trends. The market can be further segmented into customers with similar attributes like ethnicity or gender.
Furthermore, a marketing plan should include their product offering, their reputation, their strengths and weakness and pricing.
A competitor’s website is often a good starting point for competitive intelligence.
Marketing goals cover what products or services a company offers to different market segments, the key benefits a company offers, what the company’s competitive advantage is, and what targets need to be met.
Marketing goals need to be specific, measurable, achievable, realistic and time-bound. They should encompass “The Four Ps” – product, price, promotion and placement (distribution).
Most importantly, business owners should create a portfolio of past sales letters and what response they elicited. There should also be a portfolio of advertisements with information on where they are placed, the inquiries they generated and how many of these advertisements or promotions were converted into a sale.
The driver of any business is sales. Today, many small businesses use Customer Relationship Management (CRM) software to keep track of the entire sales process, including forecasts, sales pipelines and sales. It is also an effective way to keep a sales force accountable.
CRM software lets a company use what it knows about its customers to target them using tailor-made marketing to obtain a higher response rate. Today CRM systems can be integrated with accounting software and other programs such as Microsoft Outlook or your email software.
A review of a CRM system will be one of the key ways a prospective buyer of your business will assess the strength of the business’s customer base. The database should correlate with other sales figures provided and needs to be clean and contain unique records.
Well I, hope this information will help any business out there considering selling. My next business tip will be on contracts.
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Author: Kathleen Dale, Business Advisor and Founder of Compass Business Advisory.
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