When you think of the value of your solo PR business, what do you include?
The results you get for your clients, the revenue you bring into the business and the salary you are able to pay yourself and your team are all likely to top the list. But do you ever think of the business itself as an asset?
Small businesses — especially digital businesses — are a hot topic among investors right now, according to Blake Hutchison, CEO of Flippa.
“Small online business owners have a really unique opportunity right now,” he says. “There’s so much demand for what we describe as a new asset class. Most online business owners don’t think of them that way, but investors and buyers do. It’s a unique market.”
Many solo PR pros spend years building solid businesses without ever thinking about what happens when they’re ready to move on to the next chapter.
“The exit, as a concept, seems foreign to most people,” Blake says. “But actually, most small businesses have really great inherent value.”
In this episode of That Solo Life: The Solo PR Pro Podcast, Blake joins hosts Karen Swim and Michelle Kane to talk about what business owners should know before trying to sell, plus why buying a business could be the key to scaling the one you already have.
What kinds of small businesses sell?
Before Flippa, Blake worked in the leadership of multiple fast-growth tech companies. Now he’s leading the world’s largest marketplace for buying and selling small businesses.
Prospective buyers visit Flippa to browse available domains, apps, blogs and ecommerce sites. The average age of a business that sells is around four and a half years, and starting prices range from a few hundred dollars to tens of millions.
Blake says that the global pandemic helped elevate awareness of digital businesses in general.
“Now you've got a broader appreciation for the fact that there are so many good quality digital businesses out there,” he says. “As a result, people who might have been investing in other types of businesses are considering this.”
The most popular categories of businesses on Flippa tend to fluctuate with consumer habits. Early in the pandemic, home fitness and cooking assets were hot. And as restrictions have been lifted, investors are increasingly interested in small travel-oriented businesses.
Blogs and other content assets are a perennial favorite among buyers, perhaps because the business model is easy to understand. But mobile apps offer another huge opportunity.
“Buyers have now recognized that, all over the world, mobile is a very high consumption device, and therefore, people who use apps aren't going anywhere,” Blake says. “In fact, it's now more lucrative than ever before — so there's lots of buyer demand for apps.”
Three pro tips for selling a small business
Blake believes that selling a business “makes you,” in a way that even running your own business does not.
“When you've learned how to sell a business … ultimately, you get to see some money hit your bank account, and be it very small or very large, it's a windfall,” he says. “And so I believe that selling a business makes you because so few people in the world have ever done it and experienced it.”
For small business owners thinking of putting out the for sale sign, here are a few things he recommends you keep in mind.
1. Understand your financials
“It’s a little bit like Shark Tank,” Blake says, explaining that potential buyers aren’t being mean when they ask pointed questions about changes in revenue or expenses. “If you don't understand your financials, it's hard for a buyer to understand whether it's a good asset for them to purchase.”
He recommends using cloud accounting software to get a clear financial picture before you talk to buyers.
2. Pitch your strengths and your weaknesses
Being transparent about both the great and not-so-great aspects of your business will pay off in the long run.
“When buyers look at your business — if it’s a service business, a blog, ecommerce, it doesn’t really matter — they’re going to pay you for the performance of the asset, and they’re also staring at future opportunity,” Blake says. “Pitch what has happened, but also what could happen.”
Blake coaches sellers to explain what it is they are bad at because it opens the door for smart investors to identify areas where they can bring their own expertise and grow an already great business even further.
3. Consider your personal brand
Selling a business is a little like entering into a marriage, Blake says. In fact, from a technical perspective, Flippa’s team often studies dating websites to better understand how they match people with compatible interests.
And just like in dating, the way a seller presents themselves can play a role in the success of the sale.
“When you meet a buyer on our platform, you need to understand that not only are they trying to figure out whether your business is good, but they’re trying to figure out whether you’re a trustworthy individual to buy an asset from,” Blake says. “Think about your personal brand and how you present yourself to prospective buyers because you’re on show as much as the asset is.”
On the flip side: Could buying a business grow your revenue?
The path to an exit isn’t the only way for a small business to make money in this marketplace — purchasing a small business can also be a new source of revenue.
Many small business owners already spend money on social media advertising and other customer acquisition channels, but Blake says that money could be put toward acquiring a whole new audience in the form of an existing website or blog.
For example, a laundromat owner who wanted to reach new customers might purchase a successful laundry hacks blog and use the accompanying site traffic to advertise the core business services.
Many small businesses are labors of love or passion projects, and Blake says that’s where buyers often see real potential.
He says, “We want small business owners all over the world to recognize that what they’re building has real value for someone else.”
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