5 Things Buyers Look For in a Business

1 Nov

This article is based on my presentation at Wealth, Law & Legacy.

Selling your business might not be on your radar right now - and fair enough. Most business owners are more focused on getting through the month than planning their exit strategy.

But at some point, you’re going to want the option. And when that time comes, too many good businesses miss out because they weren’t ready.

Industry advisers estimate up to 80% of small businesses never sell. Not because they’re bad businesses, but because potential buyers see risk they can’t justify. The result? Owners closing up shop instead of being rewarded for years of hard work.

It’s never too early to start preparing your business for sale.

“The foundations that make a business easier to sell in the future are the same ones that build a stronger business today.”

Buyers want certainty. The more you reduce risk, the more appealing your business becomes, and the easier it is to justify a good price.

Here’s what buyers look for in a small-medium business, and what you can start working on well before you even think about selling.

#1 A business that can run without you

If too much depends on one person - tasks, relationships, decisions - buyers see risk.

Build a business that’s less dependent on you, and you’ll give buyers confidence - while freeing yourself from daily fire-fighting.

In practice, this means:

Roles and expectations are clear to everyone
Key tasks are documented and followed
The business doesn’t rely on you being the face of it or the one that has to fix every problem

“If you wanted to take a month-long holiday, what would need to be in place for the business to run smoothly, without you having to answer calls and emails the entire time?”

If you can step away and the business barely skips a beat, you’re already building value.

#2 Reliable Revenue

Buyers want predictable income and positive cashflow.

Aim for revenue that’s diverse, repeatable, and stable.

Recurring revenue increases valuation, and makes planning and managing cashflow much easier now.

Anecdote: I know of a service-based business that had been successful for over 20 years. One day they lost their biggest client. It wasn’t their fault, the client underwent an acquisition and restructured - things change. But that one client made up more than half their revenue. There was no buffer, no backup plan. What should have been a rough quarter ended up in layoffs, and the business never recovered.

Don’t rely on one client or one offer. Build in repeat revenue wherever you can - it strengthens your business now and when it’s time to sell. Think monthly retainers, subscriptions, standing orders or prepaid bookings.

#3 Reputation and Visibility

Reputation is everything. Buyers look for businesses that are known, trusted, and easy to deal with.

A strong reputation builds stability and growth through experience and word of mouth. Visibility does the same - buyers can’t value what they can’t see.

A trusted reputation takes time to build, but it’s one of the strongest signals buyers look for when valuing a business.

They’ll look at:

Your online presence, reviews and messaging
How your physical space and team present themselves
Whether you consistently deliver on your promises

“When you’re in the business every day, it’s easy to miss the little things that affect customer experience. But they all add up - and they affect business value.”

Strong reputation and visibility make it your business more attractive to buyers, increase perveived value, and make it easier to sell when the time comes.

#4 True Profit and Clean Financials

Owners often set a sale price based on what they want, and work backwards to justify it.

Buyers do the opposite. They start with the financials, consider other aspects and build up to what they’re willing to offer.

You need clean, logical financials that stand up to due diligence and support true profit and a realistic business valuation.

Most buyers will ask for three years of financials. If the numbers are messy, inflated, or shuffled to hide something, buyers see risk and will often walk.

Cleaning up your accounts now shows you what’s working, helps you spot issues early, and supports better business decisions.

Anecdote: I once reviewed a business claiming $60K net profit. Turned out, the two owners hadn’t included their own wages. That $60K was their combined income. Replacing either of them would have cost about $80K. What they had wasn’t a profitable business: it was two stressful jobs and a bit of equipment.

If your business only looks profitable because your own wage isn’t included, that’s a red flag. Buyers don’t want an expensive job, and neither should you!

#5 Preparation

Preparation gives buyers confidence. It shows that you take the business seriously - and that you respect what a big decision this is for them.

Get the basics organised early. It builds trust, makes due diligence faster and saves you from that last minute scramble to provide documents, one by one.

Even if you’re not about to sell, doing this kind of prep can be really insightful. You’ll see your business the way a buyer would - what’s strong, what’s risky, and where things need to be improved.

Start simple. Create a folder - digital or physical - and drop in info such as:

A summary of what your business does and who it serves
Key systems, team roles, and workflows
Financial summaries and supporting documents
Forecasts and ideas for potential growth

Once it’s taking shape, ask your accountant or a mentor to look over it like a buyer would. You’ll get honest feedback and a clearer picture of what changes need to be made.

“Don’t wait until you want to sell to get your shit together. Start now.”

It’ll be a work in progress as your business grows and changes. But having this kind of guide will help you make more strategic decisions now - and give you a huge head start when the time comes to put together a buyer pack.

The Takeaway

You never know when you’ll need to step back from your business. Sometimes it’s planned, sometimes it’s not.

Either way, don’t wait until that day to get things together. Every step you take now strenghtens your business and adds value later.

If a few ideas came to mind while you were reading, write them down. You’ve just started your action plan. Working on these now will make your business easier to run, and easier to sell when the time comes.

You’ve put years into your business. Let’s make sure you get something back.

Ready to make your business easier to run and easier to sell?

Get in touch and I’ll show you how.