Why You Should Stage Your Business. Today.
In many ways, selling your business is similar to selling a home. Like a home, a business encapsulates the life of its owner. Within its walls, you’ve spent countless hours, created memories, achieved success, and grappled with failure. Your business is the product of trials and errors, wins and losses. And like a home, your business is often peppered with areas you know don’t work as well as you’d like, things you know should be fixed or improved but naturally fall to the bottom of your to-do lists.
But unlike a home which is only periodically listed for sale, your business is always on the market. People who buy businesses are always looking for good investments – businesses that are well-run, generating steady, growing revenue, capturing healthy margins, and fostering healthy cultures. It’s not enough to start getting your business “ready to sell” right before you’re ready to list it as you would with a home. Your business must show itself as a good investment because its always on the market.
Here are three reasons you need to stage your business:
1. Staging your business will increase the likelihood your business actually sells
Did you know that less than 20% of business for sale actually close? This is one of the stark differences between selling a home and selling a business.
Few homes don’t sell in a normal market, at least at the right price. People always need a roof over their head. So, a typical home listed for sale does eventually sell to someone.
But when it comes to a business, investors can choose to simply not make a deal. They are only going to invest their money into a business that they believe is worth buying. So, your business has to be attractive enough not only to appeal to a buyer, but to make it through the due diligence process, maintaining that buyer’s attention.
A potential buyer must see tangible reasons your business has transferable value (what will outlast you as the owner). This could be a recognizable brand, a strong customer base, employees who provide great service, a strong revenue story not tied to the owner or well-designed, efficient processes, etc.
Staging your business identifies the areas of the business that a potential buyer will be evaluating, and ensures those areas look attractive enough to buy.
2. Staging your business will make you more money
Staging a home doesn’t usually take a tremendous amount of work or investment. You repair cracks in the wall, touch up the paint, clean the carpets, remove clutter, take care of postponed maintenance items, and add nice furniture. Doing these small things has shown that a staged home spends significantly less time on the market and sells for 6% above the asking price. (according to a survey conducted by Coldwell Banker Real Estate)
Staging a business is much harder than staging a home. The good news is that staging a business dramatically impacts the business’ value. This is incredibly important since 80% of an owner's wealth is commonly tied up in the business.
Strategic improvements to your business can increase value not just 6%, but by 60% or even 600%. Likewise, obvious shortcomings that are not addressed can dramatically reduce the value of the business.
If you think the sale of your business may be in your future (even if it’s a long way down the road), it’s going to take a lot more effort than just a “For Sale” sign. There are numerous steps and considerations to take to prepare the business for sale. Having a plan and staging your business will help you achieve the highest possible valuation for your business.
If done properly, the investment in staging your business will pay a significant return on what it cost.
3. Staging your business will actually make the business more enjoyable to run
The icing on the cake is that the very improvements you make to stage your business also make your business easier and more enjoyable to run. It’s like completing an Iron Chef-worthy kitchen renovation with enough time to enjoy it yourself instead of waiting until just before you sell the house to make the change.
Revamping your sales process, revitalizing your company culture, improving operational efficiencies, implementing scalable systems and strengthening your brand definition are all improvements you reap the benefits of for as long as you own the business – on top of making your business more attractive to buyers and increasing its value.
Timing is critical. You need to start staging your business today, even if you don’t imagine yourself selling for many years from now. And if you don’t want to heed our warning, realize that the best candidate to purchase your business may come knocking at your door before it’s ready to sell, and being unprepared could ruin the sale or dramatically decrease the amount you sell it for.
Ready to get started? Don’t set out on this journey alone. Let The Capitalist Alliance’s seasoned entrepreneurs guide the Staging of your company – to boost your company’s value, position it to sell, and make it more enjoyable to run. Remember your business is always “on the market”.