There’s a lot to think about when you’re looking to sell. From keeping your operations smooth to scouting potential buyers, getting ready to pass along your business takes a lot of work.
However, this process is easier if your company is an attractive option for potential buyers. To find out how successful founders had managed in the past, we asked a group of 13 entrepreneurs from Young Entrepreneur Council (YEC) how they prepared. Their answers are below.
What is one thing I can do now to make my online business more attractive to prospective buyers?
1. Tighten up Your Metrics and Reporting
Evaluate your metrics tracking and see where you’re losing data. Do you have the full picture of where your leads are coming from, the conversion process, and the lifetime value of different types of customers? Accurate, easy-to-understand data makes your business much more appealing to buyers.
2. Dot Your I’s and Cross Your T’s
Keeping impeccable financial records is a big deal when it comes to prospective buyers. So many people forget this one crucial detail, and it goes a long way in your first impression to these people. They’ll know that you’re someone who means business, and who considers no detail too small when it comes to the longevity of your company.
– Rob Fulton, Automation Heroes
3. Create a Manual for Everything
When considering buying a business, one of the key things investors like to see is a company that can run smoothly without the founder/CEO. I’m happy to say that my team and I have achieved this, and it’s largely due to our rigorous focus on having a detailed manual on every single procedure and policy anyone in the company might need to reference.
4. Don’t Make the Business Dependent on You
Yes, you are clearly the key to the business and its success. But if you hand it off to a buyer, could they continue to run it? Are processes written down? Is reporting in place? If you want to be able to step away from the business, make sure everything is in place for that to happen.
5. Develop and Test Great Landing Pages
6. Stand Out
One of the things that gets the attention of buyers is effective PR. Apply for as many awards as you qualify for and celebrate each one with a company press release. Buyers use lists like the Inc. 500, Forbes Most Promising Companies list, and Entrepreneur Magazine’s Hot 100 or 500 as acquisition prospect lists. The more PR the better if you want to attract buyers.
7. Develop and Build Your Email List
Nordstrom bought the flash sales site Hautelook for $270 million in 2011. Why? Because Hautelook built up a members-only email list of 4 million people who were interested in massively discounted sale events. Based on the acquisition price, that’s about $67.50 per member. Action item: Start building up your email list into an acquirable asset.
8. Get Focused
The more specialized your business, the more valuable it will be to a potential buyer. If your customers are all realtors for example, it will be easier for a real estate software company to acquire you than if your customers were very broad. We hear about huge wins by very broad companies, but there are many more acquisitions that occur because of product focus.
Sometimes what seems like a good idea isn’t a good idea at all. Use the available site metrics and A/B testing tools to see what really works on your site and what doesn’t. You might be personally fond of that nice “parallax effect” your site offers, but your customer bounce rate might tell a whole different story. Tweak and test one element at a time and know what really works. Stop guessing.
10. Make the Purchase Process Easy
11. Be Useful
According to a recent study by Google, the average consumer looks at 10.4 different web sources for information before making a purchase. Why? Because they are looking for an answer to their problem—they want to make sure they’re making the best purchase for the best result. To become more attractive, become the source of this information because if you don’t, they’ll find someone who will.
12. Concept Testing
If you’re advertising, hopefully you’re already targeting the “right pool” of prospects. One hard part is to keep varying the way you talk to them, with different visuals and messages, until you get more traction. This tactic, called “concept testing,” is a standard marketing tool. But running a successful campaign often requires an ability to understand data and make smart assumptions.
13. Focus on Your Product
It’s important to focus on building the best product you can, not on selling your company. Put your customers front and center to create an experience, because that’s how people will remember you. When you build the best company possible, others will take notice without you having to tell the story. If you lose sight of what’s important, the premium value of your brand will only decrease.