When buyers have questions, show them the data
If you think selling a business is scary, try being the buyer. It’s the buyer that has the burden of trying to figure out if the seller’s sales numbers are inflated and what other answers are an exaggeration of the truth. Nobody wants to be taken advantage of.
It’s because of this, buyers enter the relationship understandably skeptical, and it’s up to the seller to quickly earn their trust and get to the closing table.
When a buyer is doing their due diligence, expect them to ask questions like:
- Can you show me year over year revenues by month?
- What is the average sale?
- How many active customers do you communicate with?
- What is your cost of goods sold?
For some sellers, those questions would be met with a blank stare because they just don’t have the answers. That response doesn’t give the buyer confidence that they are buying a solid business with predictable revenues. “Uncertainty is the enemy of any business deal. If the buyer can’t have their questions answered quickly, they frequently have second thoughts and look to get out of the deal altogether. At worst, they are not willing to pay top dollar. My #1 piece of advice to sellers is to know your numbers.” That’s the message from Tim Bellon, business broker with VR Business Brokers of Tampa Bay.
Startup businesses almost always start on a shoestring budget and rely on revenues to fund future growth. As a result, some are slow to adopt modern technology to run day-to-day operations. As these businesses mature, they should consider adding tools to not only operate at peak efficiency but make them more marketable when it comes time to sell the business?
What technology should you use? Bellon recommends these basics at a minimum:
Quickbooks or Freshbooks are two good choices to keep track of vital accounting data. With these tools, you can see a dashboard with real-time data like who owes you money and how much, sales performance, expenses, and profit and loss graphs. It will save you hundreds of hours and will be more accurate. The pricing starts at $7.50 per month.
Customer Relationship Management (CRM)
A CRM should be the backbone of your sales activity efforts. It’s a program that tells you who to call when to do it and why. It keeps track of your relationship with the customer so that you can maintain consistency and continuity. Advanced CRM’s will automate marketing too by generating emails triggered by customer activity. Understand where your leads are coming from and how long it takes to close a sale. Any CRM can grow with you. Popular tools include Salesforce, Hubspot, Sugar, and Insightly. Many platforms operate on a freemium model, meaning you only pay for desired features and number of contacts.
If you have team members working remotely, you need a collaboration tool to keep projects moving forward. Handle unlimited details from dozens of employees through Dropbox, Slack, Asana,and Monday. Never again be left wondering about the progress of a project or where it might be stalled. You may be able to suffice with the free versions of these tools, but if you opt to pay for advanced capabilities, the cost is a nominal $6-8 per month per user.
There is no excuse for poor handling of telephone communications. It’s become standard that Voice Over Internet Protocol (VOIP) providers can allow you to:
- Track overall call volume
- Listen to calls for training purposes
- Seamlessly transfer calls to cellphones
Bellon likes Grasshopper or Phone for smaller businesses, but ask your cell carrier what enterprise options they have if these don’t fit your needs. At just $12-$26 per month, you will have no problem seeing the return on investment.
What do all of these tools have in common? They’re incredibly affordable, safe, and secure in the cloud. Used together they will enable your business to scale and as an added benefit, give your one-day buyer piece of mind that your business was run by a true professional with an eye on growing the strongest business possible.
About Tim Bellon:
Tim Bellon, Owner VR Business Brokers: Tim was born and raised in North Dakota, and after the culmination of a 21+ year career in the U.S. Army, he and his wife Beth retired in Apollo Beach, FL. He earned his Bachelor’s Degree in History and Political Science from Concordia College, and a Master’s of Science in Defense Analysis from the Naval Postgraduate School.
Tim joined the VR Business Sales Team in 2012 as the owner and managing broker of an office serving the greater Tampa Bay, FL. During this time, he has focused on helping business owners realize their goals through selling, buying, or growing businesses. He also assists individuals, and companies looking to expand, in the identification and acquisition of businesses.
Tim is community-oriented and is a proud member of the following organizations; International Business Brokers Association (IBBA), Business Brokers of Florida (BBF), SouthShore Chamber of Commerce, Commercial Finance Association (CFA), American Legion, Disabled American Veterans (DAV), and the Knights of Columbus. Tim can be reached via email at TBellon@VRSouthShore.com.