To sell anything effectively, it pays to understand the people who are likely to purchase it. If you’re trying to sell fish, for instance, the way you sell it to a Michelin-starred restaurant will be vastly different to the sales pitch to a zoo looking to feed their penguins. One is concerned with quality, the other is all about price (unless they have a particularly fussy Emperor in their enclosures). Building a business to sell is no different. To get maximum value, you need to know what a buyer wants and is willing to pay for it. The answer is multi-faceted: from positioning via industry benchmarks and perfecting your brand to attracting and retaining talent through your employer brand. In this series, we’ve previously discussed these areas and how marketing can help you build value, but one key element remains.
When the time comes to sell your business, you’re selling a lot more than tangible assets like premises and product. You’re selling potential, in the form of return on the business’ current activities. You’re selling plans for new product development and new routes to market. And you’re also selling brand - both the employer brand you’ve developed among your talent pool, and the audience-facing brand that exists in your consumers’ perceptions. Consciously building your brand is, of course, something you should be doing anyway. It’s good practice whether you’re selling your business or not - strong brand values mean a more valuable and thus more profitable brand.
How much is your business worth? Ask this question to ten business leaders, and nine of them will focus on the bottom line - turnover, profit, revenue. Important factors, no doubt, but value runs deeper than the financials. Business value is generally calculated as Net profit of business times Multiple of earnings for the sector. This series is concerned with those multiples; those variable elements of a business that can add considerable value when it comes to the time to sell. In this series so far we’ve covered benchmarking, and the importance of a good employer brand. In this piece, we’re focusing on new product development.
“Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.” – Richard Branson Anyone who’s ever caught a Virgin train might baulk at the suggestion, but there’s a lot of truth in Branson’s statement. Employees’ determine the success of a business day to day. They also contribute hugely to the value of a business when it comes to selling it.
In 2017, Paris Saint-Germain signed Brazilian football superstar Neymar for a record-breaking €222 million (about £197 million). It’s a lot more than the likes of Bristol City’s Bobby Reid, who they sold to Cardiff for £10 million. But if you compare the two on their scoring record alone (strikers, after all, are there to score goals), Reid looks like the better player, with 19 goals at Bristol City compared to Neymar’s 13 at Barcelona in the season before their respective moves.