We’ve often talked about the paperwork that you need to put in order for a business sale. But something often underestimated is the storytelling behind selling a business. Just as there was a narrative for how you started the business, there’s a story for why you’re selling, and that’s something you need to take some time to capture.
The Easy Questions
The questions you should tackle first all lie in the past:
- Why did you start the business in the first place? If you didn’t start it, why did you buy it?
- What challenges have you overcome along the way?
- What goals have you achieved?
The Big Question
In between the past and the future is the present, and that most present-tense of questions in this process is always the first one a buyer asks us when we share a business, namely, Why are you selling the business? Now, there are hundreds of “correct” answers to this question, but only a couple very wrong ones, for example:
- I think revenue has topped out (this means there’s no chance for growth which puts a damper on the profit needs of the buyer)
- I’m working too much (this could imply you don’t have processes or key team members in place)
The Hard Questions
The previous questions you knew the answers to intuitively and could answer them just as quickly as they were asked. These next questions are also in your past, but they are in the buyer’s future. They also are unlikely to be easily answerable on the spot. They include:
- What have you not done, and why? While it might be unpleasant to revisit failures or missed opportunities, remember that buyers are coming in with fresh eyes and energy, and with your experience to guide them, they might be able to revisit some of those opportunities and convert them into successes. We’ve seen it plenty of times.
- If you were continuing in the business, what would you do first? What would be your focus? This gives buyers a road map. They may have their own (sometimes not good) ideas, but most times they will really value your advice.
- Why would you be interested in this business if you were a buyer? This is a chance to speak about the industry and its growth, the fact that it’s a lifestyle business, or how much you enjoy working with the employees.
If you want to explore these hard questions in more depth, we’ve talked about some of them before in an exit interview for sellers.
Remember that your answers to these questions don’t need to be lengthy and detailed, but no potential buyer is going to complain if you do decide to share a lot. Even better, if you are willing to be vulnerable and share some of your own personal challenges along the way it can put a human face on the business and allow buyers to understand your journey better (and consider how good of a fit it might be for them). Writing these answers down allows buyers to get to know you even better before a first meeting. As such, you might even save a few anecdotes or points to share in person to underline some key ideas.
But most importantly, taking the time to answer these questions will help you stay calm and focused on the WHY of selling your business, which will be important on those days when you might be frustrated about due diligence or feel like the buyer’s questions never end. Selling a business is emotional, though the level of emotion varies for each individual. A helpful counterweight to that emotion are the cold hard facts of your entrepreneurial journey.
Do you feel like you’ve got a compelling WHY for selling your business? We’d love to hear about it. Give us a call!