When economic conditions are optimal and most people are happily going about life – except the committed pessimists – most of us simply go with the flow and don’t worry about being prepared for the bad times. Unfortunately, everything in life – and in business – is cyclical. There are good times and bad due to many factors, almost all of which are outside our individual control. But today’s challenging economic climate and uncertain markets have already shown business owners some important lessons.
The first is that there are buyers who get serious about purchasing businesses in “bear” markets. Business purchases are up for many companies assisting buyers or sellers compared with last year! Houses do sell when they are properly priced and updated and are attractively staged for presentation. What distinguishes those businesses or houses that sell from those that languish in the marketplace and either take forever to be sold or simply aren’t sold at all?
The answer is simple to understand. The lesson is clear. The problem is in getting business owners – or homeowners – to pay attention and take action. Essentially:
“If you fail to prepare; prepare to fail!”
Most business owners or homeowners are reluctant to “invest” in preparing their businesses or houses to be ready to go to market. The homes or businesses that sell are either extremely value-priced much lower than the competition or have been “prepared”
In houses, that means they are totally cleaned and the clutter removed, the key elements have been replaced or repaired. The roof is new or recent. The inefficient air conditioning or heating has been updated. The old-fashioned kitchens or bathrooms have been remodeled. The soiled carpets have been replaced with new carpeting or wood floors or ceramic ones. The interior and exterior have been painted or touched up. In short, these homeowners have made a significant investment in preparing their homes to go to market. While it can be argued that they may not get more than their investment back, perhaps even a bit less, the difference is that these houses sell and the unprepared ones sit unsold for very long periods, at a significant cost per month in both dollars and personal challenges.
That is the lesson for business owners. They must be prepared if they want to sell their business in this market – or any market! Business owners must know the true value of their business, not their “opinion” or what they “want” or “need”! An independent 3rd party valuation is necessary to know the “truth” about the business’ value. An analysis of strengths and weaknesses and opportunities to increase the value or make the business more attractive are critical. The successful seller thinks like a “buyer” and is prepared for the “due diligence” that precedes any potential sale. And they get professional help to market their business or home, so that more buyers are made aware and the emotional issues that always come up between buyer and seller are handled dispassionately by the professionals who understand the process. And it is a process that takes time and preparation to bring about a successful conclusion.
The process starts with evaluation of the business or house, to determine what is good and what needs to be enhanced. It continues with an honest valuation and consideration of what is necessary to improve or make ready. Then a decision can be made of whether to go to market and at what price or whether to first grow the business or improve the potential of the house to sell to make chances for success greater. Professionals can help in either case: improving the business or house or taking it to market. The secret is to have professionals who can make a market rather than simply wait for a buyer, because it will take a lot of lookers to find the buyers who may be interested and one buyer is often no buyer because without a “limited auction” with several buyers, the one buyer has no motivation to make a fair offer.
It is true that most people’s business or home is their biggest asset or investment. It is the vehicle through which they hope to have the life they want. Yet it is amazing that so many are reluctant to invest in empowering that asset to be ready to go to market successfully so they can have the life they want. It takes planning. It takes investment. It takes proper preparation. Without these elements, chances for success go down immeasurably!
