Part 3: Reputation
When business owners are preparing to sell their businesses, there are many ways they can make themselves attractive to buyers. As we represent many current and new business owners in Colorado, we have compiled the top five ways sellers can make themselves attractive to buyers. In Part 3 of our series, we will focus on Reputation.
A business's reputation is not only vital to the success of a business, but it also plays a crucial part in the business's value when it comes time to sell. Despite this, many businesses tend to ignore the importance of reputation and focus more on revenue and growth. In truth, a business's reputation is a major factor that a buyer evaluates when deciding to purchase a business.
What gives a business an appealing reputation? First, a strong market presence, having a strong market presence will give the buyer confidence that the business being sold is established. A company that has 3+ years of history is evidence to a buyer that the company is stable and has a strong revenue potential. Additionally, a business that is a leader in its industry or niche will command a higher listing price, since it is already very influential in the market.
It is important to recognize that a business's reputation can fall to the owner of the business. If the owner is the "face" of the business and the business's reputation is a direct result of the owner, this may cause issues for a buyer. It will make it harder for a buyer to transition the business if the previous owner was a focal point in the reputation of the business.
Lastly, positive online reviews are essential to a good business reputation. Bad reviews or public relations can lead to a decreased listing price and/or repel potential buyers.
All in all, having a strong business reputation is a major factor for buyers. A great reputation will result in increased activity on a listing and a higher listing price.
In our next issue, we will explore the next important way a seller can become more attractive to a buyer: culture.
Selling a business is a complicated manner. If you have additional questions, please contact one of our Colorado business brokers at 720.259.5099 or email us.
