3 Questions Every Business Owner Should Ask Before Selling Their Business

Article Overview: What should business owners consider before selling?  Business owners should understand what buyers are looking for, consider how AI and technology could affect the future value of their business, and develop a strategy for maintaining buyer interest in case the first buyer doesn't close.

If you're thinking about selling your business, you probably have a long list of questions.

How much is my business worth? Who would buy it? How long will it take to sell? What will I do after I sell?

Those are all important questions.

But there are three other questions business owners should be asking before they put their business on the market.

The answers can have a significant impact on your sale price, the buyers you attract, and ultimately whether your transaction closes.

1. What Are Buyers Actually Looking For Right Now?

One of the biggest mistakes business owners make is assuming that because their business is profitable, there will automatically be a line of buyers waiting to purchase it.

That's not necessarily how the market works.

Buyers have preferences.

Those preferences change over time based on interest rates, economic conditions, industry trends, technology, and the availability of capital.

For example, we've seen continued interest in service businesses and businesses in the trades, particularly among buyers looking for companies with recurring revenue, strong cash flow, and opportunities for continued growth.

The lower middle market is also attracting attention from a variety of buyers. That can include individual entrepreneurs, strategic buyers, private equity groups, and other companies looking to expand.

And many of these buyers aren't necessarily looking for a $50 million acquisition.

There is significant opportunity in businesses valued below $15 million.

What Does This Mean for Business Owners?

It means that being sellable isn't the same as being attractive to buyers.

A business may have good revenue and profitability but still have characteristics that make buyers nervous.

For example:

• The owner is heavily involved in day-to-day operations.

• There is significant customer concentration.

• Revenue is declining.

• There isn't a strong management team.

• Financial records aren't organized (the most common issue).

• The business depends too heavily on one key employee.

• There isn't a clear growth strategy.

• The business hasn't adapted to changing technology.

  
  

If you're considering selling your business in the next 2-3 years, understanding what buyers want today can help you make changes that increase your attractiveness when you're ready to sell.

That's why I recommend that business owners start thinking about their exit well before they actually want to leave.

2. Does AI Have an Impact on Selling My Business?

This is becoming a more important question every year. And the answer is yes.

But probably not in the way you think.

You don't need to become an AI expert. You don't need to completely rebuild your business around Artificial Intelligence. Instead, you should be thinking about how AI may affect your business over the next three to five years.

When buyers evaluate a business, they're not just looking at historical financial statements. They're also thinking about the future.

Buyers Are Thinking About the Long-Term Impact of AI

A buyer may be asking: "Will this business still be competitive five years from now?"

They may also be thinking about:

• Which functions can be automated?

• Will AI reduce labor requirements?

• Can AI improve customer service?

• Can AI improve marketing?

• Can AI make employees more productive?

• Will competitors use AI to reduce their costs?

• Does the business have an opportunity to leverage AI after the acquisition?
  

This doesn't mean that every business needs to implement an elaborate AI strategy. Sometimes, small improvements can make a meaningful difference.

For a business owner preparing for a future sale, demonstrating that you've thought about technology — and that the business is capable of adapting to it — can help demonstrate that the company isn't stuck in the past.

In fact, for some businesses, AI may become part of the growth story you present to a buyer.

The important point is that you don't want the buyer to be the first person to think about how technology could affect your business — think it about it yourself, first.

3. What Happens If My Buyer Backs Out?

This is one of the most uncomfortable questions to ask. It's also one of the most important because deals fall apart.

A buyer can spend months reviewing your financials, talking with employees, conducting due diligence, negotiating financing, and working toward a closing and still decide not to move forward.

• Sometimes it's because of something discovered during due diligence.

• Sometimes financing doesn't come together.

• Sometimes the buyer's personal circumstances change.

• Sometimes the buyer simply gets cold feet.

And when you're selling your business, that's a difficult situation. You've invested significant time and emotional energy into the transaction, and suddenly you're back at square one.

The Fix: Don't Rely on a Single Buyer

One of the advantages of having a proactive sales and marketing process is maintaining relationships with other qualified buyers.

Think about it this way: If you were selling your house, would you be comfortable having only one person interested in purchasing it? Probably not.

The same principle applies to selling a business. A strong buyer strategy isn't necessarily about finding one buyer. It's about creating enough interest that you have options.

Multiple Buyers Create Leverage

When appropriate, maintaining an active buyer list can accomplish several things.

It can:

• Reduce your dependence on a single buyer.

• Create competition.

• Improve negotiating leverage.

• Give you alternatives if a buyer walks away.

• Potentially shorten the time needed to find a replacement buyer.

• Help protect the momentum of the transaction.

This is one reason why the marketing process matters so much when selling a business. You aren't simply putting a business "for sale."

You're identifying the right buyers, reaching them, qualifying them, and managing those relationships throughout the process. If the first buyer doesn't work out, you don't necessarily want to start from zero.

Start Thinking About Your Exit Before You're Ready to Sell

If you're a business owner thinking about selling someday, you don't need to put your business on the market tomorrow. In fact, you shouldn't.

One of the best things you can do is start asking these questions well before you're ready to exit:

1. What are buyers looking for right now?

2. How will AI and technology affect the value of my business?

3. What happens if my first buyer backs out?
   

The answers can help you identify weaknesses, improve your business, and ultimately put yourself in a stronger position when it's time to sell.

At Collaborative Commercial Business Brokers, we believe selling a business is more than putting a listing online and waiting for buyers to find it.

It's a marketing exercise, a financial exercise, and a strategic exercise.

And the earlier you start preparing, the more options you typically have.

If you're a Wisconsin business owner considering an eventual sale, let's talk before you're ready to sell.

A conversation today may help you build a more valuable and more marketable business tomorrow.

To your success,

Jason Huett, CMO CEO | Business Broker