WHY NETWORKING HELPS YOU SELL A BUSINESS
Networking is an important skill every business owner needs to develop. It’s important for a lot of obvious reasons. The best partners come from people you’ve met in neutral situations. The best clients, the best suppliers, the best distributors – the list goes on. Sometimes, it’s just nice to meet likeminded people who are facing the same challenges you are and can help you find a solution. There is, however, one scenario that most owners don’t consider – when it comes to selling a business. We know that it’s important to get an accurate value of your business and how we need to get your financial statements in order, and business analytics software can help you with this, but we don’t realize that our network is crucial to helping find a buyer.
Selling a business can be a scary process but it’s a very straightforward one. You put your business on the market and you field inquiries from buyers. Where do those buyers often come from? Your network! (and if there aren’t any buyers, you often turn to business brokers or bankers who can ask their network). Which “groups” make the best buyers? Let’s take a look.
If you have a business that relies on upstream suppliers or downstream distributors, they are potential buyers for your business. A supplier or distributor may want to expand vertically into the channel and they’re more likely to acquire someone they are currently working with. They know the volume the are doing with you and so they have a more intimate understanding of your business.
If you are active in your region’s marketing scene, you probably know a few of your competitors and have met them in person. It’s not uncommon for you to become friends socially despite being “enemies” professionally. These types of relationships often lead to amicable mergers and acquisitions because your competitor has a very clear understanding of the market environment. They know what a fair deal is and so you can avoid some of the headaches associated with educating a buyer on the ins and outs of the market.
This is rarer than the first two scenarios but you might discover that your employees want to acquire the company from you. They may need to rely on you and your network in order to achieve their goals, whether it’s through seller financing or other financial means, but it’s something that certainly possible.
The key to finding a buyer is knowing the right person. Since you won’t know who the right person is before you sell, it’s best to meet as many people as possible. Plus, it’s fun!