Have you watched the HGTV show “Designed To Sell”? It’s one of my favorite TV shows. In it, someone is getting ready to try to sell their house, and a professional stager is employed with a budget of $2,000 to use for fixing up the house and staging it to increase the probability of a successful sale. I’m always amazed at how much better the houses look after the professional stager spends the $2,000. However, there are a few things that no matter what the condition of the house the stager almost always does: get rid of junk and clutter, properly store and organize things, and simplify the look and feel. While a business sale is far different from selling a house, prospective buyers will still develop a strong impression of the business based on how it physically looks and feels when they visit. So, just like on Designed to Sell, when you are preparing to sell your business you should do some physical clean up of your business. You should ask your business broker for advice on what should be done to make the business physically more marketable. Here are a few suggestions of things to consider:
1. Do you have obsolete, worthless, or unneeded equipment or furniture cluttering your office, manufacturing facility, store, or warehouse? If so, and it won’t have any value to a buyer, get rid of it.
2. Is your business in need of interior painting? Even if you have a manufacturing business or a warehouse-based business, if the walls are scuffed or dirty, it will create a less positive impression than if the business looks clean.
3. Are desks and work spaces clean and organized? If employee desks and work spaces are cluttered buyers may get the impression that the business is chaotic, confusing, poorly run, and possibly under-staffed. Implementing and/or enforcing a policy for employees to keep desks and workspaces organized and clean is a good use of time and energy prior to selling a business. If there is inadequate storage space, consider getting more cabinets / storage containers or using off-site storage for items that aren’t utilized on a daily basis.
4. How do your employees look? How employees dress and are groomed can vary dramatically from one business or industry to another. Before selling a business it may be worthwhile to assess whether your dress code is appropriate and being adhered to.
5. What music is being played in the work environment and at what level? Notice that when you go into a nice retail store that has the “shopping experience” down pat, or a Starbucks there is usually pleasant music playing in the background at a low enough volume that you can easily have a conversation. These businesses have figured out that sound is part of the customer experience, but that appropriate volume is critical. It is not uncommon in warehouse and production businesses with loud machinery for employees to have music loudly playing. I would encourage you to require music to be non-offensive and be played at a low level when giving prospective buyers a tour of the business. Better yet, select music that you believe is a good complement to your business.
6. Are the bathrooms and break room clean? Bathrooms and break rooms that are dirty can produce a visceral turn-off for buyers.
7. Do the carpets or floors need to be cleaned? Have you ever noticed how Les Schwab Tires’ gleaming floors convey a sense of quality and competence? In contrast, if you’ve ever been in a grocery store where there was an obvious spill that didn’t get cleaned up and has left a dry ugly spot on the floor, the perception of that store’s quality is often impaired.
8. Are there burned out lights that need to be replaced? Not only do burned out lights create a negative quality impression for a buyer, but they also may make it difficult to see what the prospective buyer may be acquiring.
9. Is the landscaping and exterior of the building clean and in good repair? As a buyer approaches your building they will begin developing their first impression of the physical business, and will subconsciously determine whether the information they have reviewed in the package seems consistent with the quality they are observing. Cigarette butts or garbage in the parking lot, overgrown landscaping, or chipped paint can all lead to a negative first impression.
10. Is there any minor maintenance or repairs that are needed for the building, furniture, fixtures, or equipment? Deferred maintenance may send the signal to a buyer that the business is not producing enough cash flow to take care of necessary repairs or that the business may not be well managed.
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Another important issue is that 27 of the economists believe that the Fed will raise interest rates in 2010, with the majority of those thinking the rate increase will be coming in the second half of 2010. If you’ve read my past blog posts, such as the one titled, “
