Want to sell your business? Attract retailers to your product

A client approached us recently to help sell his business. He designs, manufactures and sells designer greeting cards.

He has run the company for a few years and found it difficult to run multiple companies, so he has decided to sell one and focus on running the other.

He approached us for advice on how to sell his company and value his business. To begin, we collected a few facts so we could get a sense of what kind of business we are selling.

1. Operating for five years;
2. Less than $100,000 in revenue per annum;
3. No retail sales. All sales are B2B;
4. Trademark on the name;
5. No patents;
6. No ownership of manufacturing plants or equipment;
7. Three months of inventory on hand.

Despite the slow sales, the owners believe the product has potential. Sales have been slow because the business lacks attention, which when put in place, will yield results. The product is unique, well-packaged and well-received by buyers.

Here are the two type of buyers who may look at their business.

Enter Buyer A

Buyer A buys businesses based on future revenues. Buyer A is prepared to forgo earning now for bigger pay-offs later.

They will want to see patents, trademarks, exclusive licenses and distribution agreements. These kinds of assets provide assurances of future revenue.

However, the business for sale does not offer this kind of protection.

The product has a cutting edge design, but the design offers no barriers to entry. As soon as the product proves successful, it is likely to be copied by competitors.

Enter Buyer B

Buyer B wants a business with healthy profits now. This buyer wants to see a proven track record of sales, and assurances that the success is repeatable in the future.

Buyer B wants three years of sales history and three-year sales projections.