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Making a Business Sale Successful

September 21, 2011 By Sozo Staff Leave a Comment

Simply put, products and services need to be marketed.  Without marketing, how would the public ever become familiar with them? And, just like a regular product or service, most businesses also have to be properly marketed in order to have any hope of being sold, so it’s therefore very important for business owners to take the development of their marketing strategy very seriously. Like any other type of marketing strategy, marketing a business requires that the seller become familiar with a target demographic – that is, the type of person who they believe could be convinced to become a potential buyer of their business. The two important steps in this process are identification and targeting.

Identifying the Buyer

Identifying the buyer is the first step in marketing your business because it answers the simple question “To whom should I market?” Experts say that most business buyers can be placed in one of two categories: financial or strategic.

Financial Buyers

A financial buyer is exactly what it sounds like – a person whose interests are centered on the financial aspects of a business. Financial buyers tend to focus only on a company’s ability to generate instant returns, and their goals are usually more short term than those of the strategic buyer. While financial buyers do care about the long term, they generally aren’t willing to invest a large amount of time in order to see returns. Rather, they aim to acquire businesses that will generate revenue quickly and immediately.

Strategic Buyers

The second type of buyer is a strategic buyer. Where financial buyers are focused on a business’s immediate ability to generate income, strategic buyers are less interested in this aspect. Rather, they often look beyond a business’s current economic value and, instead, attempt to predict how a company could benefit them in the longer term. This could involve making major changes to the company, expanding the business, merging it with a partner, or absorbing it into their own business. Whatever their future plans for the company, strategic buyers – unlike financial buyers – generally tend to be motivated by factors other than immediate cash flow.

Targeting the Buyer

As a business seller, once you’ve identified your potential buyer, you now need to tailor a marketing package to this buyer. This customized sale package can be developed with the help of a transaction adviser, such as a specialty business broker, and it should be personalized depending on the type of buyer that you are trying to address. When targeting financial buyers, your sale package should focus on basic income-related information like profits, revenue, and immediate growth. For strategic buyers, this financial information should be included, but you should also include information about less obvious aspects of your business, such as your customer base and details about your operations. It may seem simpler to include such information in both buyer types’ sale packages, but, by doing so, you risk detracting their attention from the aspects of your business that truly matter to them.

With any type of sale and with any type of buyer, a specialty business broker is an incredibly valuable resource. Not only can they assist seller with identifying and targeting primary buyers, but they can also lend their expertise to the negotiating table and the after sale closing procedures. Professional third parties are also helpful when it comes to performing the initial valuation of the business and the allocation of assets.

Filed Under: Marketing, Transportation

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