Selling your business is harder than ever, and is only going to get tougher.
Generation X is a problem, and so are Millennials.
There is a huge wave of baby boomers currently heading for retirement, but Generation X is 40% smaller than that generation. And the trend for buying businesses is shrinking as the culture of startups and entrepreneurship increases by the week.
There are two questions that need to be answered. Firstly, where are all the qualified buyers coming from? And secondly, what does it mean for people who are looking to sell their business in the next 5-10 years, many of whom are reliant on selling their business to provide a retirement income?
Going it alone
Businesses starting up in the last year is over 600,000, and it is not unreasonable to expect that number to have grown exponentially by the end of 2018. The next generation of business owners are entrepreneurs: people more interested in setting up their own thing than buying into a business.
Watching startups explode has led to a new-found interest in people starting their own businesses. Entrepreneurs are hooked on the success stories of the likes of Trunki, the sit-on, ride-along children’s suitcases that have become a familiar sight at airports all over the world with their latest published revenue sitting at £8.13m, or Instagram, the photo-sharing app that was acquired by Facebook for a cool $1 billion in cash and stock.
As a result of such successes, the idea of becoming an entrepreneur has never been more popular. With every company hoping to hit gold with their product or service, it is unlikely that the startup fever will be passing on anytime soon.
There’s a reason business incubator hubs and startup accelerators are big business these days.
But what does this all mean for the baby boomer generation? Well, these Gen Xers and Millennials are the target; these are the people that you want to buy your business. But their dwindling numbers and personal motivations mean it’s becoming more difficult than ever to sell a business. According to the Exit Planning Company, in any 12 month period only 20% of businesses on the market sell, and this looks set to drop even further over the next decade.
So how do you reach this new audience? What appeals?
Selling to Gen X
1. New tech
One of the key things is new tech and innovation. Everybody wants to be part of something groundbreaking, and if you have created something that no one else has, there is always going to be someone looking to buy in on the action.
2 – Strong brand
Your brand should be recognisable and consistent. This generation wants to acquire respected and known companies that people can instantly picture. Branding done well introduces you, tells your story and leaves a lasting impression. A strong brand manages the perceptions of your business. It elevates and differentiates your products or services, giving your potential buyers and customers reason to choose you over your competitors.
3 – Large existing and growing user-base
If your existing user or client-base is large or quickly growing this will make you vastly more desirable to snap up. This generation will look at your considerable audience and see it as evidence that if they buy you they will be able to grow the user-base to incredible heights.
4 – Fantastic and talented in-house team
People want to buy something that is ready to sell and, for the most part, they are not looking to change the product or service you are offering. Tweak it maybe, but essentially, they will be looking to keep what you have created the same. Because of this if your product or service is appealing it will be because it has already been created by a very talented in-house team.
5 – Growth potential
This generation wants to buy something that has huge growth potential, and not just in terms of its audience. They want to buy into something that can evolve and get bigger, either by combining acquisitions or products or by having the potential to create something that works alongside it to help push its growth.
To make your business more appealing to Gen X’ers and Millennials you need a future proofed exit plan. You need to show them why your business stands apart from the crowd, and why they should focus on what you have created rather than creating yet another startup.