Small Business Blog

In the conclusion of this series of posts on selling your business, I want to focus on the thought that you don’t always have to sell to someone who wants to buy your business as their primary source of income.

Hopefully at some point, you sat down and developed an exit strategy. If not, I encourage you to take the time this weekend and start sketching out one. If you’ve already finished it, did you include the possibility of selling your business to another business, or did you just assume another entrepreneur would buy your business and keep things going the way they are?

In the same way that you have done market research on who you clients are, why they buy your product and what kind of gift card to send them when they place a big order, you need to do some market research on the type of customer that may be buying the biggest product you’ve ever sold - your business. I want to open your mind to the opportunity of another business being the buyer.

There are a lot of reasons that an existing business might want to buy your business. Here are four of them:

1.) A business that is growing and wants to open a new division may not want to take the time to start from scratch to develop a new line.

Consider this the take-and-bake pizza approach. You’re hungry for pizza, you don’t want to go through the hassle of making your own dough, shredding the cheese and spreading the sauce, so you swing through Papa Murphy’s on the way home and pick up a pizza that is already prepared. You still have to put it in the oven, to bake, but the bulk of the work has been done for you already. When buying a new division, a business may want to have some of the control in the last stages of development so that the production will possess the same identity that the existing business already has, but maybe doesn’t have the time or the skill required to start from scratch, so buying an existing business becomes a great opportunity.

2.) A business that is stagnating may want to have a new channel to develop revenue.

If a business is healthy, but no longer growing, it may be looking for that next edge that will help propel them back into the lead of their industry. If your business has that edge, you may be a perfect match to help that stodgy old business become the face of fresh.

3.) A competing business may want to eliminate some of the competition.

This one is a little more tricky to set up than the others, but none the less is a very viable option. Remember back in high school, when that other guy was dating the girl you wanted to go out with? Staying on the sideline and watching them dance together at homecoming was anything but fun. I’m certain that the thought of somehow sabotaging the other guy never crossed your mind. But if the school cafeteria started selling plates of competition eliminators that would guarantee the girl would be yours, there would be a huge line and every guy in the district would stop packing a cold lunch.

In business it’s exactly the same, no matter how friendly you pretend to be with your competition, if they continually take money from customers and put it in their pocket and not yours, then eventually you want them gone. If the opportunity to buy them out presents itself, it can often times be a very attractive offer.

4.) A supplier or client may want to expand vertically along the supply chain.

Control over multiple layers of the supply chain can be extremely beneficial and profitable for business. If you are in a place where your supplier or perhaps a client is looking to expand, you may find yourself in a great position to sell. With inside knowledge of the industry and an intimate relationship already formed between your company and theirs, extending a company’s reach vertically can prove to be a great move.

I hope this series has caused you to begin thinking about preparing to sell your business and some rudimentary steps to take between now and that future date.

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