Selling a business can be a difficult and often personal process. Business owners can treat their business like a child they brought into the world, making it hard to let go. Owners want to see the business they created thrive even if they no longer own it which is why finding the right buyer is so important. Finding the right buyer can be a difficult task, however as a business broker, I have helped dozens of small business owners sell their business and there are a few steps you can take to make the process easier while ensuring buyers see value in your company.
Determining the Right Time to Sell
Ideally, you will want to plan your exit one-to-two years in advance while continuing to grow your business. You should contact a broker to explore your options well in advance of the sale of your self-storage facility. Many business owners think that is way too early to engage a broker, but a professional business broker will appreciate the planning.
In my experience, many owners tend to overvalue their business leading to some difficult lessons about selling their business. When you think every day about selling your business you may have already checked what other similar companies are selling for. Just because another self-storage facility sold for a certain amount does not necessarily mean you will get the same value.
That said, putting your business on the market with at least 2-3 years of positive growth will be more appealing, more valuable and easier to sell.
Determine Sales Price
When determining the selling price, we look at several different variables. These include financials, the owner’s role in the business, how many hours they work a week, the experience of the management team, the quality of the assets, and how the business is trending year over year.
When it comes to your financials you should have at least the last 3 years of income statements, balance sheets, and corresponding tax returns. A buyer will look at this information to see if the business is profitable.
A profitable business will typically be valued based on the seller’s discretionary earnings. These earnings are the pre-tax and pre-interest profits before non-cash expenses, one-time investments and any non-related income expenses. Having detailed books and records with verifiable discretionary earnings, will yield greater results and value for your business.
Look at what comparable businesses have sold for to help you decide an attainable asking price. Keeping in mind of course this is simply the asking price and the final sales price can vary. To achieve the highest results the more attractive you make your business, the more potential buyers you’ll attract, the higher sales price you will receive in the end.
Maintaining Your Facility
To receive proper value for your business you must maintain high standards. Make sure your facility is clean. You don’t want a potential buyer turned off because you didn’t power wash the concrete, replace rusted locks, or fix faulty unit doors.
Additionally, a buyer is not going to pay top dollar for a business requiring thousands of dollars in repairs. If something is broken fix it before you show your business. You may not need to invest in new units, you just need to maintain your equipment. If a piece of equipment is on the verge of breaking, then disclose this information to the buyer so you don’t have issues after closing.
Managing Your Online Presence
Buyers doing their due diligence on your business can easily gauge the perception of your facility through online reviews. Managing your reputation online is important. Obtain new 5-star reviews. Good reviews go a long way in solidifying the goodwill associated with your business.
The goal of this process is to bolster your positive reviews while driving down any old negative reviews, if any. Businesses with negative reviews are not appealing to buyers. If you have any PR issues, I highly recommend fixing common complaints such as access issues or dirty facilities before a potential buyer brings them up.
Again, this is why planning an exit is important. Having 1-2 years since your last batch of negative reviews, if any, can help you sell your business faster and for a greater value.
Selling your business can be a complex process. Follow these tips as you are planning your sale to position your business for the best possible evaluation and sale.
About the author
Brian Bond is the principal of Strategic Business Brokers Group, in affiliation with American Realty Brokers who has helped dozens of owners sell their businesses across Arizona. Bond has been named “Broker of the Year” by the Arizona Business Broker Association.