The ultimate guide to selling your business

Nick Brogden, the founder of Earned Media, explores why many Australian small businesses do not consider selling their business and why every business owner should have an exit strategy.

The small and medium business market is massive, yet many business owners have not considered selling their business. According to the Recipe for Success Survey, which surveyed 2,000 Australian small businesses, 59% of SMBs do not have an exit strategy. 

Selling a successful small business can be a lucrative exit strategy if you own a successful small business. However, the process of selling a small business can be quite complex, just like running the business itself.

As an expert in digital marketing, I get that the digital world has completely changed what customers expect. These days, customers find one-tap shopping, instant messaging, and, yes, real-time engagement with businesses great and convenient.

Define your goals

Before selling your small or medium-sized business, do a deep dive self-assessment. Thoroughly evaluate your financials, such as revenue, profitability, and cash flow. Analyse your customer base, market share, and competitors. Assess your operations, processes, systems, and employee performance.

Image credit: Semrush

Then, do a SWOT analysis. What are your business’s strengths, weaknesses, opportunities, and threats? Review legal, tax, IP, and contractual obligations. Organise up-to-date documentation like financial statements, tax returns, customer data, employee records, and legal docs.

Get an accurate valuation based on industry benchmarks, comparable sales, and growth potential. Hiring a business valuator is a good idea for an outside expert opinion.

Most importantly, identify your goals, such as an ideal timeline, preferred deal structure (asset sale vs stock sale), and post-sale plans.

Figure out who your ideal customers are and if your product is a good match

The next step is to define and understand your ideal customer profile (ICP) as much as possible. An ICP describes a company’s perfect customer. It shows what kinds of customers the company should target. 

Image credit: Gartner

Knowing the ideal customer helps marketers create ads and campaigns that appeal directly to those customers’ wants and needs. Using an ICP can help companies make more sales and keep customers longer.

1. Start by defining your product. What unique problem does it solve, and what makes it different from competitors? Don’t skip this foundational step.
2. Next, research on the market landscape. Look into industry trends and read up on common customer pain points and desires. Survey or interview potential customers directly to get an insider view.
3. With that market research under your belt, you can start identifying your ideal customer. Think about their industries, company sizes, and typical behaviours. The more specific details you can gather, the better you’ll be able to hone in on them.
4. But don’t just go off assumptions. Tap into the feedback of customers you already have. Ask them about their goals, frustrations, and how your product has helped. Their real-world experiences and opinions are pure gold for refining your ideal customer profile.

Closing the sale

Closing sales deals quickly ensures the potential customer is ready to buy and understands how to meet their needs. Follow these basic steps:

• Qualify leads properly. Ensure the prospect truly needs your product or service and can afford it.
• Understand their specific short-term and long-term goals and challenges.
• Listen carefully, directly address their problems, and show you care about their business.
• Explain things clearly using simple, non-technical words they can understand.
• Point out the return on investment and how soon they will see benefits.
• Be open, honest and collaborative to build trust.
• Reduce barriers by offering free trials, flexible payments, guarantees, customer testimonials, and good support.

Negotiating small business sales

When you want to sell your business, you can’t just slap a “For Sale” sticker on the window and call it a day. There’s a lot more to it than that. You need to have a solid game plan and know how to negotiate like a pro. 

Negotiating is a huge part of selling your business, and your skills can make or break the final sale price and terms. If you’re not a master negotiator, you’re putting yourself at a big disadvantage. 

Here’s what you can do:

• Develop a good relationship with the seller. Understand their perspective and find common ground. A positive connection facilitates open communication during negotiations.
• Create a proposal that considers the seller’s goals. If price is an issue, explore alternative deal structures like earnouts, seller financing or retention agreements that could satisfy both parties. Look for beneficial trade-offs.
• Set walk-away limits beforehand to avoid rash decisions under pressure. Be prepared to terminate negotiations if your requirements can’t be met respectfully.

Beyond the sale

You start a business with the dream of one day selling it for a huge profit. You pour your heart and soul into making it successful by working around the clock and making many sacrifices to grow your company. 

Finally, that big payout arrives when you sell the business. But then you realise you had been so focused on reaching that successful exit that you have no clue what to do next. 

That said, here are some tips and things to think about after you have sold your business:

1. Invest sale proceeds wisely

Don’t let the money sit idle. Diversify investments based on your risk tolerance and goals. Consider seeking professional financial planning advice.

2. Decide your next professional path

If interested in another entrepreneurial venture, carefully evaluate ideas and plan thoroughly, leveraging your previous experience. If not, explore options like consulting, coaching or retirement and find ways to stay engaged and be fulfilled in life.

3. Manage seller’s remorse

Be prepared for possible seller’s remorse or doubt after exiting the business you put effort into. But don’t dwell on regrets. Remind yourself of the motivations behind selling. Lean on your support system.

4. Embrace new opportunities

Most importantly, maintain a positive mindset focused on new opportunities ahead rather than looking back. Embrace the spirit of change and possibility that led you to sell. Your greatest adventures may still lie ahead.

Building an SMB sales strategy takes work upfront but is worth the effort. Once you have clearly defined goals and ideal buyer personas and have structured the deal and nurturing processes, the key is to measure and refine your approach continuously. 

Analyse what’s working and what’s not, then optimise accordingly. If you stick with it and keep iterating based on results, you’ll land on a sales process that predictably drives new customer acquisitions monthly to scale your business.

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