Every business has a Story. Much like a person, a business has a life of its own, separate from the story of the owner. It has a “birthday,” important people and events in its history, tales of successes and challenges, periods of growth and decline. Healthy, well-cared-for businesses can live for generations, while others quickly fade.
Essentially, the Story of a business is its heart and soul, the “life” that exists outside its financial bones.
Why the “Story” of a Business is so Important
So why is it so important for sellers to share the Story of their business with potential buyers?
Randy Hendershot, Co-Founder and Principal of Evolution Advisors, a leading Business Broker based in California, explains. He says, “Sellers put a lot of emphasis on the P&Ls, inventory, sales, and other numbers, but they often overlook the intangible aspects of a business. Because of that, they’re not capitalizing on all the business has to offer; they’re not presenting its complete value.”
To get a better idea of the importance of the Story, imagine a buyer, Bob, is looking to purchase a business. He’s narrowed it down to two possibilities, a manufacturing company in the city or a service business in a nearby town. Both look great on paper; each has strong profits and growth potential, a fair asking price, great location…
Now imagine you are the seller of the service business, and you tell Bob the Story of your business. That it’s known for outstanding customer relations, and the Internet site was recently upgraded to handle online requests. You tell him about how the most profitable division was created in 2002 by the sales manager who noticed customers lacking a complete solution to their problem. You share what it’s been like to run a prospering business with such a great group of loyal employees.
Now, when Bob is deciding which business to buy, he’s thinking about more than just the numbers. He’s imagining himself owning the service business, being an important person in the community. He’s thinking about what he could do to expand the most promising part of the business. He’s picturing working alongside dedicated employees who really care.
By sharing its Story, you’ve brought your business to life, while the manufacturing company Bob was considering remains a mundane business with no personality.
“Sellers can benefit greatly from telling the Story of their business,” says Mr. Hendershot. “It builds excitement. Buyers can see themselves running the business, becoming part of the Story. They’re more invested emotionally.”
Are There Dangers in Telling the Story of a Business?
But can telling the Story backfire? What about the “challenging” parts? Can knowing about the ups and downs, the hard times and challenges, actually hurt a sale?
Mr. Hendershot says it’s unlikely. “By putting all the cards on the table, the seller is actually doing potential buyers a favor. It builds trust and improves buyer confidence, all key elements in making a sale. I recommend anyone selling a business work with a business broker who knows how to tell, and sell, the Story. It’s that important.”Read More