CPA’s/ Business Advisors: How To Assist Your Client With Marketing Their Business
by Martin Hansen
Your client’s business looks good (inside and out), their basic documentation is in order. Additionally, you have explored valuations with your client, and you have a range of value for their business. Now you are ready to begin assisting your client with the process of marketing their business to potential qualified buyers.
Types of Buyers
Before you can advise your client, you need to understand that there are three primary types of buyers:
- Those who are buying themselves a job
- Those are looking for a business that needs “fixing up”
- Those who see your client’s business as a growth opportunity that they can exploit, with the end goal of selling the business again at a later date for a sizable return.
Geography Related to Buyers
It’s important to note that you will market a $400,000 business differently than you would a $7,000,000 business. Keep in mind that there are three different categories of businesses for sale, and the valuation will determine how wide of a geographical area you should target with your marketing efforts.
- Generally speaking, if your client’s business is valued under $1 million, there is a 70%+ chance that the buyer will come from a 50-mile radius of the business
- Businesses valued at more than $1 million are more likely to attract buyers inside and outside the 50-mile radius
- Businesses that eclipse the $5 million valuation mark may attract local buyers, but are more likely to attract non-local domestic, and even international, suitors than companies with lower valuations.
Create a Company Profile
Assist your client with creating a one page “teaser” document with the following items:
- Location (general location, not necessarily specific)
- Years in business
- Type of entity
- Revenues for the last full year
- Net before tax
- Estimated revenues for current year
- Estimated net before tax for current year
- Fixed assets value
- Operational marketplace area
- Number of owners
- Number of employees
- Real estate, leased or owned
- Reason for the sale
- Additional comments
- The document should have all the general facts about the business but nothing that will identify the business with just this document. For more detailed information on this process and how you and your client can use the DealMaker360’s automatically created “marketing website” (electronic version of the”teaser” document) – go to www.dealmaker360.com.
How to Research Suitors for Your Client’s Company
Finding potential buyers is not as difficult as you might think! Using the Internet and other resources, you’d be surprised at how easy it is to build a list of potential buyers. Potential buyers are referred to sometimes as “suitors.”
So, you are asking yourself, “do I have to find buyers for my client’s business?” Generally speaking, NO. However, you can assist the client with identifying buyers.
Consider assisting your client with this four-point sales strategy to find buyers. In general, your client can identify buyers in four ways so meet with your client and build a list:
- Your client knows the potential buyer and/or their company
- Your client “knows of” a potential buyer and/or their company
- You or your client looks for previously unknown buyers. Send the “teaser” to all your professional contacts, including other CPAs, business attorneys, business brokers, business consultants/advisors. They are bound to know of a potential buyer.
- Ask your clients to consider a Facebook or LinkedIn ad campaign. They are easy to put together, especially with the “teaser” document you have already created. This of course will void any confidentially your client may desire.
It is a well-known fact that most sellers will look to the Internet immediately to consider “listing” their business. Before your client gets their hopes up with this process, it is also widely known by the pros that the failure rate of “listing” a business is close to 90%, and that many of these listing sites are very expensive. The other option is listing with a local business broker; again, the failure rate is high.
So, what should you advise your client to do? Well first, work with your client and exhaust the four methods above — your chances are considerably better than a simple “listing.”
With your help, your client could be on the way to selling their business. For more information on selling a small business, browse our other resources for professionals. Good Luck!