Selling a Contracting Business: Are You Building Yours On Speculation, Or Is It A Custom?
Since selling my remodeling business in 2004, many remodelers have asked me for help and insight about how I did it and how they too could sell their businesses some day. They ask great questions. The challenge is that there is no easy one size fits all answer. In this article I will share a few big picture considerations to help guide you. In a follow up article I will discuss typical buyer types you can consider as possible prospects to sell to.
What kind of business should you build?
Most remodeling businesses were not designed, they evolved. Each business will be unique because each owner is unique and has unique motivations that drive the evolution of his or her business. In addition, each buyer will be looking for specific characteristics when assessing which businesses to look for and ultimately buy. These are facts that became clear to me as I thought about and planned for the eventual sale of my business.
Rather than share specifics about what I did, I think you will find more value in the related considerations I discovered that helped shape the direction I eventually went in. Perhaps by considering my suggestions below, you can make a plan for and evolve your business in a specific direction to increase its potential salability and value.
Begin with the end in mind
First, I suggest it is best to be thinking of your exit strategy now so you can keep your future options open. By planning now you can identify what you will need to do to get your business ready for sale in the future. The idea is to always be getting your business ready to sell, even if you never sell it. If you do it right, in addition to the selling option, maybe someday it will be worth keeping. If you keep it you can collect the net profits, while someone else leads the business and manages the day to day.
Put your strategy in writing
To get started, I suggest you write an ad today to describe the company you will be offering to sell some day. When writing your description, think about the things that will make the business worth more money and at the same time more attractive to your target buyer. By writing the ad I suspect you will be able to identify and list the positive characteristics your business already has and should work to keep. Then you should list those characteristics you will need to work on and or add to make your for sale ad valid by the time you want to sell.
Consider who you will sell to
If you’re considering selling your business some day you will need to consider the types of buyers out there as well as their typical motivations for buying one business versus another. In my next blog I will discuss the two typical buyer types you will want to consider as you make you plan and write your for sale ad.
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