It is well known that the city of Chicago has a long history of industry and commerce, offering a business environment with natural competitive advantages rooted in its location, infrastructure and workforce. Given the fact that there are more than 1.2 million small businesses operating in the state of Illinois, it is essential for small businesses to establish and market themselves with a niche or specialized foothold within their specific industry.
Although it’s not always obvious, every business is unique in one way or another. Whether it be how long you’ve been in business, that the company has been passed down for generations, or because it’s located two blocks away from Millenium Park, there is some special aspect that sets your business apart from its competition. Oftentimes however, these specialties aren’t promoted to their fullest potential. Although understandable, this oversight is a startegial error which can be especially costly during the small business acquisition process. As the business owner, you know your company better than anyone and being able to effectively convey these aspects to your broker will ultimately lead to the most profitable outcome.
There are of course many unique attributes of a company which can make it more attractive to a possible acquirer. This fact is especially true in the saturated Chicago business listings. Certainly, the numbers are important, but potential buyers will look beyond the figures alone. Factors that make your company special or unique can often not only make the difference in a possible sale or merger, but also can dramatically increase value. Review the following to see if any of them apply to your company and if they are transferable to new ownership.
Brand Name or Identity
Does your service line have a recognizable name? While it doesn’t have to be Sara Lee or Quaker Oats, a name that is well known within a specific geographic region, or one that is identified with a specific product can be extremely advantageous. A product with a unique appearance, taste, or image is also a big plus. For example, Uno Pizzeria & Grille has a unique regional identity, and also a distinctive taste. Both factors are big pluses when it comes time to sell.
Dominant Market Position
A company doesn’t have to be a Fortune 500 firm to have a dominant position in the marketplace. Businesses who are major players in a niche market are in a dominant position as well. Possible purchasers and acquirers, such as buy-out groups, look to the major competitors in a particular industry, regardless of how small it is.
Maintaining an accurate and current list of customers is important as it can be a valuable resource in many aspects of your business. Not only can it provide leads for sales, a group for testing new products but it can also become an effective method to provide positive customer feedback and social media promotion. Newsletters and other publications have, over the years, built mailing lists and subscriber lists that create a unique loyalty base. Just as many personal services have created this base, a number of other factors have contributed to the building of it. The resulting loyalty may allow the company to charge a higher price for its product or service.
A long and favorable lease (assuming it can be transferred to a new owner) can be a big plus for a retail business. A recognizable franchise name can also be a big plus. Other examples of intangible assets that can create value are: customer lists, proprietary software, an effective advertising program, etc.
The ability to charge less for similar products is a unique factor. For example, Wal-Mart has built an empire on the ability to provide products at a very low price. Some companies do this by building alliances with designers or manufacturers. In some cases, these alliances develop into partnerships so that a lower price can be offered. Most companies are not in Wal-Mart’s category, but the same relationships can be built to create low costs and subsequent price advantages.
Difficulty of Replication
A company that produces a product or service that cannot be easily replicated has an advantage over other firms. We all know that CPA and law firms have unique licensing attributes that prevent just anyone off of the street from creating competition. Some firms have government licensing or agreements that are granted on a very limited basis. Others provide tie-ins that limit others from competing. For example, a coffee company that provides free coffee makers with the use of their coffee.
Technology, trade secrets, specialized applications, confidentiality agreements protecting proprietary information – all of these can add value to a company. These factors may not be copyrighted or patented, but if a chain of confidentiality is built – then these items can be unique to the company.
As any seasoned business person will testify, selling a company is one, if not the biggest deal of a professional career. Countless hours have been poured into cultivating a company with unique service and offerings, so when it comes time to sell, it’s crucial to entrust in a Chicago business broker who is not only well versed in local market, but also one who appreciates your company’s unique attributes and the nuances of the industry it serves. By understanding these industrial strengths, your broker will be better able to maximize valuation and make the selling experience not only smoother, but one that is more financially advantageous.
For a free consultation on selling a business or hiring a business broker in Chicago or across the State of Illinois, please schedule a virtual meeting using http://calendly.com/abameeting or contact us to find out how we can help you achieve the highest value and close on the sale of your business or company.
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