How to Find Out If Your Baby is Ugly!

My wife and I like to go to open houses from time to time just to see what’s out there and how other people have done things. We’ve been doing it forever and it’s just a fun occasional hobby that can give you a glimpse into someone else’s world.

Our real estate friend, however, warned us never to make negative comments about a home when we were inside because you never know who is listening or who some of the other people at the open house may be. Which is fair I guess- you could be standing next to the owners of the home and have no idea they weren’t just another couple browsing the market.

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It doesn’t seem like the advice most people get though because very often at these events you’ll hear people immediately tearing into the place like they were judges on a home show! They comment on everything and much of the commentary seems to be negative- things they’d have to immediately rip out, replace, or change if they could ever even get themselves to hold their noses and buy the place.

If you are the homeowner then it might be pretty painful to listen to and in this situation certainly a lot of it does come down to taste. But you might also notice that if you hear the same comments a few times about the same things and there is a theme developing you might want to pay attention if you are really hoping to sell.

People won’t generally tell you to your face and your friends may even tell you how much they like your contrarian style or bold choices even if they don’t really agree. But if you are talking about people who might be thinking about investing money into buying your home you better believe they aren’t going to hold back.

How to Get Honest Feedback on the State of Your Business

As it turns out, the same thing applies to selling a business except the comments are much less about taste specific issues and more about things you could potentially improve.

So, if you were looking for outside feedback on how to improve your business and what other people might see as wrong with it, or at least where you have room for improvement, a fast and free way to find that out is to consider selling it!

Before I sold my catering business, I spent a month getting it ready to sell. A big part of doing that was trying to think through all the objections someone might have to it and trying to address those.

I went through everything from the last time the trucks had their oil changed to the way the storage bins were labeled. I cleaned up the office, got rid of some of our oldest and least used equipment and even finally got rid of some old tires the original owner had been storing (who knows why?) in the dry storage.

The result was I had seven offers within a week of listing it.

But another result was, for the next three months I ran it before the sale was finalized, it ran better and smoother and with fewer headaches. We also made more money in those three months than we had the prior year and the prior quarter.

There are a couple ways you can do this in your own business. If you can detach yourself from your day-to-day (this is hard) you can look at it yourself objectively and ask yourself honestly what about it is messy, chaotic, not used any more, not as optimized as it could be, etc.

Start with your financial statements- because this is where any buyer will start. Are they current, clear, and with any messiness removed?

Can you quickly see where the income is coming from and what your biggest expenses are just by reading the account names (not because you know all the quirks)? Can you compare this year vs last year and the year before and see the year-over-year improvement? Can you explain any big ups and downs? Can you explain decisions around the size of the staff or how much you spend on advertising? Do you know how much a new customer costs you to get and how many you get in a month or a year?

If all this sounds like too much introspection and work, then talk to a local business broker.

Let them know you want to get their opinion on what a buyer would think of your business and what they would be willing to pay for it and what would hold them back from paying more.

Now keep in mind, the broker is going to want to be nice because they want to earn a commission from selling the business, but if they are any good, they are also going to give you some hard truths about where you need to improve to get a buyer to pay top dollar. This is the advice you want. It may be hard to see your baby as anything but beautiful but an honest broker should be willing to mention the warts.

You in no way need to pay or sign anything to get this review from them. They look at businesses all day long and this is how they drum up new business. By no means does every call result in a seller. I know- I was a broker for years!

Why does this matter and why do you want to listen? Because a business set up to sell well and bring in top dollar is a business operating at its full potential, bringing in the most profit and running as cleanly and efficiently as possible. That is a good business and the kind you want whether you are going to sell now or in twenty years from now.

When you aren’t thinking about this it’s easy to let things go, stop trying to grow, stop keeping an eye on the financials and maximizing profit and not caring too much about being efficient.

Pretty soon you don’t even notice you have tires in your storage area and it doesn’t even bother you! But buyers will come in and immediately notice those tires, along with all the other things you could be doing better.

If you want to make sure you’re running a top-notch business, look at it as if you were going to sell it today. You (or a good broker) will immediately notice all the areas you’ve let things go and you’ll have a fix it list to get to work on. If you follow through, not only will it help you grow but you’ll also be more profitable when you do and your business will be worth more whenever the day comes you actually want to sell.