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Don't sell yourself short
by David Wolstencroft - #63

For any SME business owner looking to increase the value of their business prior to sale, there is a new strategy on the horizon. According to the experts, it's essential to look at the new generation for ideas and then beat them at their own game.

It's hard to ignore the growing divide between traditional small business owners and their younger counterparts. In an age dominated by new technology and globalization, those who favor 'old school' face-to-face marketing find themselves using very different sales techniques to the new generation of PC savvy whiz kids.

Where Baby Boomers value personal networks and 'pressing the flesh', Generation X and Y prefer online advertising and internet marketing.

Current SME business owners with an eye to selling their business need to bridge the generation gap in order to gain the best possible sale price for their business. After all, it is the young and enthusiastic Generation X and Y entrepreneurs who represent their most likely buyers.

'Many of my clients face a dilemma prior to the sale of their businesses,' says Boyd Roberts of Corporate Image. 'How can they ensure that their businesses appear as profitable as possible prior to sale, yet also spend on the intangible assets that appeal to Generations X and Y?'

The answer, according to Boyd, lies in consistency and long term planning. 'There is no doubt that business owners can reap enormous rewards from 'intangible' assets such as websites, blogs, forums, consistent branding and viral marketing.

But they need to allow at least a year for these intangibles to take hold. Only then will a business be in a position to increase sales and rates, and maximise profitability, thus creating a sale price premium on the eventual sale of the business.'

Recent research published in the Journal of the Academy of Marketing Science only serves to confirm Boyd's position.

The research, conducted by academics at the University of Georgia and East Carolina University, indicates a positive relationship between levels of advertising/promotional spending and the market value of the firm. Marketing activities were clearly shown in the study to deliver future cash flows and increase shareholder wealth.

SME business developer, Mac Healy, warns of the consequences of failing to recognise this clear link. 'The sad reality is that most SMEs are sold for emotional and external reasons, such as family problems, owner burnout or brief economic turbulence.

Rather than being so spontaneous in selling, an SME owner must plan for any sale well in advance so as to make structured, concrete steps toward build a marketing strategy that will eventually lead to a better sale price.'

Mac, Principal at Melbourne's Phalanx Resources, believes that the key to maximising business sales is a systematic approach to all aspects of the business, including marketing spend.

The first step is for SME business owners is to acknowledge that the time will come when they will want to sell their business, and that they need to be active and take initiative now to ensure that they are remunerated for their hard work.

The adage that you 'have to spend money to make money' is never truer than it is for the sale of a business - but of course that spend has to be wise and part of a business's overall strategic plan.'

'The second step is to acknowledge that aspiring business owners of Generation X and Y clearly place a higher value on marketing services than Baby Boomers, particularly in the online environment, and to build this into your business plan.

Clearly, the experts present a compelling case. And as always, the approach is to gain support from experts and tailor a marketing plan specifically to your business. With a comprehensive plan in place, you will be well on your way to reaping the rewards you deserve when selling your business.

For more information
Contact David
+61 3 9902 6757

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