Show Me the Money! Understanding the Value of Your Business
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Clearly an unfinished project has no value to the business. Why do IT organizations struggle so much with talking to the business? IT organizations, and even some IT best practices i. Alignment is an interesting word. Alignment generally means to work in parallel. IT organizations generally struggle in speaking with the business because they talk in technology terms and not in business terms.
Brush up on the stats of your industry. For my social media clients, I speak to them on their terms. I tell them that Instagram has 10x more engagement than any other channel.
This makes you stand out from the rest. No one likes to be ordinary, or work with someone who is ordinary. Be extra… in a good way.
Speak to your clients in a language they understand. That language is money. I recently had a client who wanted me to document their event on their Instagram account. First rule for any newbies out there: So I emailed her back and spoke to her on her terms. I told her this was about business and seeing a return on investment. I told her my role was to help her business extend its reach and create brand awareness, and to bring you in more quality leads.
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I told her that this is part of a wider marketing strategy, and what I will do will help them be discovered by more ideal clients that, with further careful planning, be ready to buy from her. She agreed to my original rate because I spoke to her about business. It's critical to understand how your broker values your business and how she will maximize your sales price. Your broker should have access to published comparables and rules of thumb to apply your business to determine a fair value. These are available through BizBuySell. An experienced broker will ask you questions during the first meeting to uncover any hidden earnings that will help maximize your business value.
This includes understanding how you normalized your earnings to ensure multiples are applied properly. Your broker will also ask about officers' salary levels, pensions, additional perks, or discretionary items such as cars, insurance, travel, and entertainment.
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Additionally, your broker will discuss the state of your books and records to make sure they will hold up through a due-diligence process. You should also plan to ask questions to determine how your broker will find buyers, specifically, the right buyer for your business. You must find an ideal buyer for your business to maximize price, and choosing the right business broker is essential to that process.
Straight Talk, Up Front
Make sure to find out how your broker plans to maintain confidentiality about your potential sale. Brokers should require that any interested buyer complete a confidentially agreement, that is, a nondisclosure agreement, also known by its initials, NDA. The broker should always be present in any meetings or conference calls between you and potential buyers.
Experienced brokers will always steer the conversations in a productive manner and in a fashion that protects confidential business data, such as customer names and vendor contacts. Use this meeting to determine whether your broker cooperates with other brokers. This is an area that many brokers disagree on.
Some believe that they can broker the best deal by being the single middleman representing both the seller's and the buyer's interests to arrive at a fair outcome.
Others choose to work with other brokers to improve their chances of finding the best buyer for their seller. Both approaches work, but be sure that your broker isn't refusing to cooperate with another broker solely because he or she wants to keep both sides of the commission.
Also, not all cooperation is equal.