Vol 9: Yes, you can sell your business.
Chat Joglekar, Founder of Baton shows us how real small businesses can make real money by selling, when they're ready.
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TL;DR
It’s not just the mega restaurant chains or giant tech companies that can sell their business. There’s a big demand to purchase small businesses out there, for those who do want to sell, and Chat walks us through how he’s helping to do just that.
Why a valuation of your business is important
What you can do to prepare to sell
Why it’s hard to get the real value right
Baton: Zillow, but make it small biz
Baton helps connect small business owners with potential buyers, all while facilitating the hard parts of the transaction. Picture the last time you looked for a house on online, but this time you’re looking to take over a restaurant. Reflecting on the inception of Baton, Chat shares, "It was really a conversation I had with a friend during COVID... He was looking to buy a small business, and talking about it, we realized what was missing in this space was the Zillow for small business."
Fortunately for Chat, he had experience working at Zillow and other tech companies that were making hards transaction a lot easier. Chat’s background provided the perfect springboard to address the gap. He saw an opportunity not just to create a platform but to help small business owners by making the selling process transparent and understandable.
What is Baton?
Selling a business is hard and conveying the value of a small business is even harder. Baton demystifies and facilitates the sales process, so that real business owners can build personal and generational wealth. Building a small business takes an obscene amount of work and Baton helps you to get the value for it you deserve. By providing an upfront valuation (scroll down for more on this), Baton empowers owners with critical information and matches them with serious buyers, making the path to sale as smooth as possible. Targeting primarily "Main Street" businesses – from wine shops to lunch counters – Baton is focused on ensuring that the backbone of the real economy can transition ownership with confidence and clarity.
Can small businesses really sell?
Chat passionately argues against the misconception that only large companies can make good money when sold. Chat’s anecdotes of successful sales – from wine shops to dog walking services – bring home the point that real small businesses have real value. "It's really the folks on the avenues and streets... Those are all some of the companies that we've helped represent and or have already sold," Chat proudly states, showcasing the diverse array of small businesses that can generate real financial value.
Step by step: How to sell
Selling a business, particularly a small one, can often seem like navigating through an uncharted territory. Chat Joglekar, CEO of Baton, lays out a simplified, step-by-step process for small business owners looking to sell. Here's how he breaks it down:
Step 1: Acknowledge the Desire to Sell
The journey begins with a crucial decision – recognizing the time may have come to sell your business. This acknowledgment is the foundation of the process. As Chat says, "Really what we're doing is we want to support any small business by getting them to a successful sale." It’s hard to know when the right time is, but having data like a true valuation can help.
Step 2: Understand Your Business's Valuation
Before anything else, you need to understand what your business is worth. This step involves getting a clear picture of your business's financial health and its valuation in the current market. Chat emphasizes the importance of cash flow and multiples in this step, "The first part is a price, and a key part of that is getting the valuation and really understanding how your business is going to be valued by the buyers." Don’t know what cash flow or multiples are? Baton helps not only explain what those are, but helps you calculate them.
Step 3: Prepare Your Business for Sale
This involves more than just making your business look attractive to potential buyers. According to Chat, it’s about ensuring your financials are in order, understanding the key levers of your business's value, and possibly making adjustments to improve its appeal. "If you understand how we get to cash bflow and you understand where kind of B, the valuation comes from, you can really start to understand what are the levers that drive this for your business."
Step 4: List Your Business on the Market
With a clear understanding of your business's worth and having prepared it for sale, the next step is to list it on the market. Platforms like Baton facilitate this process by connecting sellers with serious buyers. "We want to empower owners with the right information upfront, which is primarily this valuation, and then if they're interested in selling, match them to serious buyers," Chat notes.
Step 5: Engage with Potential Buyers
Once your business is listed, potential buyers will start to show interest. This stage involves engaging with these buyers, negotiating terms, and finding the right fit for your business's future. Chat suggests that this is also the stage to communicate the intrinsic value of your business that might not be immediately apparent from its financials alone. "It's going to be hard to get that intrinsic value that the existing owner sees," he admits. However, he encourages owners to communicate these values to potential buyers, leveraging them as negotiation points. This approach underscores the deeply personal aspect of selling a business, beyond just the numbers.
Step 6: Closing the Deal
The final step is the sale itself, which includes finalizing the terms, signing the necessary paperwork, and transitioning the business to its new owner. This step requires careful consideration to ensure that all parties' interests are met and that the business continues to thrive under new ownership.
Interested in learning more?
Reply to us here or at community@numarket.co and we’ll put you in touch with Chat and the Baton team.
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