What factors sell a business?

You have to think like a buyer. You have to ask what the buyer’s motives will be to buy your business. If you ask an accountant, they’ll give you an answer that focuses on numbers – on profit and loss. There’s no doubt that that is a big factor in any business sale. But in our experience there are many equally important features that will draw a buyer to your business. Rather than short term return on investment, most buyers are buying the quality of your customer base. This is what will bring you a premium price. Everything else flows from that. For example, location is only important insofar as it contributes to your customer base. A charcoal chicken shop exposed to high foot traffic because it is located outside a Coles supermarket will attract a bigger client base than a chicken shop in a dark alley. That’s what makes location important: the capacity to attract a large client base.

So, to attract buyers we need to look into their motives for buying your business, and tailor our ads to attract the right buyers. In addition to location, important features that buyers are looking for include:
• Stable and predictable cash flow (including current owner’s time in the business)
• Reliable financial information (vital proof that your business is consistently profitable)
• Customer diversity
• Quality of workforce
• Capacity for growth (also called “potential”)
• Operating systems and procedures (including security systems, point of sale system, purchasing systems)
• Facility and equipment condition (including price of rent and length of lease, size of premises)
• Goodwill ( a high flow of customer traffic, and return customers, brand recognition, local reputation)
• Barriers to competition
• Product range

We include a different range of this information in our advertisements because it’s important to buyers. We give a lot of thought to the information in our ads. Although we want a broad appeal, we have to provide enough detail that buyers with particular requirements will be attracted.

Using a business broker to help you sell your business is a good step. Here at First Choice, we have 20 years’ experience in helping people sell businesses of all sizes. Between us, we have over 85 years’ experience! We know what buyers are looking for, and we know how to highlight the unique features of your business, to attract a wide interest. Trust in our expertise, and have a full discussion with us about the special features that your business will bring to its new owner.