We find that a lot of business owners thinking of selling their business aren’t as informed as they should be about the realities of selling a business. So we work hard to teach our clients and work with them to better understand how to build salable businesses. For this post, we put together the 3 things most business brokers in Philadelphia fail to tell their clients.
If you are thinking of selling your business, make sure you’re aware of the following:
1. Business Brokers in Philadelphia Should Tell You Not to Rely on a Single Customer.
Does this sound familiar? You start out with an idea for a product or service. You begin doing it yourself and, to your great surprise, discover that there is a great demand for what you have to offer. The business takes off. You are moving ahead with a good mix of customers, and then one of your customers goes through tremendous growth and starts sending you lots of orders. You think this is great: “My customer is doing great; I am so lucky.” Before you know it, this one customer becomes 50%, then 75% of your revenue. You are making lots of money from this customer. Then it is time to sell your business, and you suddenly realize that now you have one customer that has complete control over your business. What do you do?
This is a very common trap that many owners of business fall into, and there is an easy fix. But first, you have to be aware of the risk. The easy fix is to identify the situation early and then start actively increasing the number of customers you deal with. Leverage the established relationship with your top customer to secure others. Ask for referrals, and use the extra profits to hire a new salesperson to gain more customers. You can also acquire companies that have more customers.
2. They Should Remind You to Pay Attention to Industry or Demographic Changes.
Another potential risk in business can be a change in demographics or industry. The astute businessperson recognizes trends before they happen. Let’s say the neighborhood where your business operates undergoes a transformation and your products are no longer desired. One solution is to move your business to a more appropriate location. Another solution is to make sure you have a mobile-friendly website to attract out-of-area customers.
An example of a change in industry would be the printing industry. Today, someone with a laptop computer and a printer can do more than a commercial printer could do a few years earlier with a room full of equipment. The smart printing companies have survived and continue to thrive. They have transformed their business to match the needs of their customers. Many printing companies have become fulfillment houses and have combined direct mail and printing functions. Others have added graphic design departments and are involved with website and brochure design.
Look at your business. Are you meeting the needs of your customers? Are you keeping on top of trends in the marketplace?
3. They Should Remind You to Keep Your Eye on the Exit.
All buyers assume risk when they purchase a business, but the successful seller will decrease the risk for the buyer by always keeping their eye on the EXIT. No matter how secure you are in your business, no matter how satisfied, no matter how you expect to go on forever, you must be constantly planning for the day you will no longer own your business. Good business brokers in Philadelphia will be sure to tell you that you need to focus on the end goal. Keeping a clear mind about your eventually leaving the business will impact your approach to business. If you’re aware that the business must be able to run without you, you’re more likely to build a business that a buyer will want.
There are many fixes to the above situations, but the key is to always keep your eye on the EXIT and identify potential selling problems early on. You can’t wait until the last minute to put together a successful exit strategy. If you’re looking for good business brokers in Philadelphia who can help you start the process, please contact the Benjamin Ross Group at 215-357-9694 or download our fact sheet, which will give you further information about our firm. We’d be happy to help.