Pete Higgins at 2nd Avenue Partners, a Venture Capital (VC) firm, has told me a few times the toughest thing about his business is telling people, “you have a good business, it’s just not a VC business.”
In other words, you’re not going to get funding because VC’s need to believe there’s a good chance the company they fund will take off, i.e. have hockey stick growth. But, it’s still a good business, which can grow, make a profit, create jobs, add value, etc.
I can think of many small business owners who read the headlines and dreamed of massive amounts of funding, only to find out what they had was a nice profitable business.
It comes down to goals and expectations. And most importantly, knowing what the other party wants.
A business buyer wants a business that is “scalable.” So when a seller tells them they’re coasting, how everybody works at a relaxed pace, or similar, the first reaction is, “the culture here is conducive to growth (and hard work).”
And owners, if you are thinking of selling, know what buyers want. While I have a long list of things (see my book If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want)?), be sure:
Your financial systems are solid and the statements accurate;
Be able to show a growth plan, not just use the word potential;
Get rid of your major dependencies, the top one often being you, the seller. Take a month long vacation. If things are in good shape when you return, your company’s value just went up.
You have a good business. That’s great because there are a lot of crappy businesses out there. Be proud of it.
“The truth stalks us like bad credit.” (Journalist) Ta-Nehisi Coates
