When it comes to selling a business, having all your documentation in order will help you make a more professional presentation — and that could ensure you get a good deal as an outcome. One of the key documents that you must ensure is written well is the business value proposition. We’re going to help you understand why this document is important and how it can get you a better offer for your business.
What is a value proposition, and why is it important for your business?
You’re looking to sell your business, but you want to get the best offer possible. You’ve worked hard all of these years, after all. How will you show prospects the value your business can offer them? That’s where the business value proposition comes in.
The business value proposition is a document showcasing your business’s strengths. Essentially, it tells the reader what makes your business a unique entry in the industry you’re focused on. Think of the document as a representation of what your business is and why people should be interested in buying it. The more compelling the value proposition is, the better the chance of generating more interest and a sense of competition among potential prospects who will make an offer. It’s also one of the most important documents that prospects will ask for when you decide to sell your business.
Crafting a unique value proposition that differentiates your business from the competition
The value proposition should include a few elements: appeal, exclusivity, credibility, and clarity. Many propositions do not include all of these elements — and when your documentation lacks vital information, it puts you at a disadvantage. Thus, knowing how to craft a great value proposition before you announce the sale of your business is important.
So, how do you make your value proposition unique? Start by looking at what makes your business different and sets it apart from competitors in the same industry. This might be one of the hardest steps — but it’s also the point that can make or break your proposition.
Let’s consider an example. You’ve created a consulting firm that’s been growing over the last few years. There’s nothing special about a consulting firm — you can find many of these businesses online and in physical locations. So, what makes your firm different? Why should an investor buy your business if there are other consulting firms on the market too?
Maybe you’ve decided to offer your services 24/7. Now, that’s something that you don’t often see when it comes to business consulting firms — so that could be just what you need to focus on in order to make your value proposition unique and also attractive. This is an example of how something as simple as offering extended customer service hours could help your business stand out — and even ensure you are able to craft a unique and compelling value proposition.
Note that this is not the only thing that you have to include in your value proposition. You also need to provide a clear overview of everything that makes your business valuable. Another thing that you have to include is the finances of your business.
Prospects don’t just want to know what your business is about. They want to see what it could generate for them. This is where the finances come into the picture. By including the profits you have been able to procure in the past few years, you’ll be able to show the potential of your business more clearly.
There’s another focus point to keep in mind while you create your value proposition. In the business world, one of the best ways to assure success is to ensure your business can solve a problem — and that’s something that the proposition should include as well. Remember that the value proposition forms part of your business plan — and the prospects will definitely want to view the entire plan as a whole too.
So, in your value proposition, be sure to include a section that outlines the problem you’ve identified and how your business is helping to take care of the issue. Make sure this part is clear and concise. The prospect needs to understand easily how your business solves a “pain point” and how this translates into a profitable opportunity.
Apart from all of these factors, there’s one more thing to keep in mind. When you craft your proposition, it’s important to establish your brand’s positioning and credibility. What makes your brand an authority within the industry? This could include the fact that the business was established a couple of decades ago. Perhaps your company excels in the area of customer service and has thousands of positive reviews.
While taking all of these factors into consideration, it’s also important to keep things simple. Sure, you can add some jargon that investors will understand, but keep industry-related technical terms to a minimum. The prospect that reads through your value proposition doesn’t want to struggle to understand it. State your points clearly and without overcomplicating the proposition.
How to communicate your value proposition effectively to prospective buyers
Once you’ve crafted your proposition, the next step is to ensure you effectively communicate it to the prospects who are interested in making an offer. There are different ways in which you’ll communicate the value of your business to the buyers, so first, take a few things into consideration.
Start by looking at how you are going to approach the selling of your business. Are you going to use a broker to help with the process? Or would you rather focus on selling privately? If you are going to use a broker, which is generally a good idea, you can get them to help with the process.
A broker acts as an intermediary between you and the buyers. They’ll deal with the communication, but it’s also possible to connect you directly to the buyer in some cases. This often happens when buyers make offers that you want to accept. Now, when the broker communicates the value proposition to the prospects, it’s important to make sure they have a good understanding of your business — what you offer, how you do business, what makes your business unique, and the problems your products or services solve.
This is why an extended meeting with the broker is so important. You need to provide them with all documentation related to your business. This includes the business plan, the value proposition, and financial documents. Luckily, if you opt for a highly experienced broker, they’ll be able to do a thorough analysis of all the documents and make any necessary suggestions or modifications.
When it comes to selling privately without the use of an intermediary like a broker, you’ll need to present the documentation to the prospects. There are a few ways you can go about this process. Here are a few options that you can consider:
- Set up a meeting with each prospect. During the meeting, provide them with a detailed view of the business plan. Show them the financials in your business plan and hand them a copy of your business value proposition. You can then give them a business card and exchange contact details for further communication. Tell the prospect about any other interested investors so they know what level of competition they are looking at. You can also provide them with an overview of the best offer you have obtained thus far. Make sure to give them a few days’ time to go through everything and come up with an offer.
- Turn your business plan and proposition into a presentation. Visuals convey data much better compared to a boring and lengthy business plan. You still need to ensure you bring copies of your business plan. Having both printed documents and a visual presentation can help to make the process of conveying the message to the prospects much easier.
- Take the presentation idea and turn it into a conference setup. Invite multiple prospects that are interested in buying your business. This can help you do one presentation and show it to all of those who might want to make an offer for your business. It saves time and cuts down the number of individual meetings you’ll have to attend with each of the prospects.
Once you’ve communicated your value proposition, the next step is to allow prospects to consider your business and the data you have shared with them — then get them to make offers. If you’ve gone through all of the steps and made the entire presentation attractive, you’ll likely receive multiple offers from investors who want to buy your business. You should take some time to review each of the offers that come through and see how they fit with your expectations. Another strategy that you could use is to broadcast the current offers you have, as this can encourage some competition among investors and might result in some offers being increased. A broker can also generally help with this step, as their goal is usually to get you the best possible offer for your business. Just make sure you provide the broker with all relevant data they will need to answer questions from prospects. This way, the entire presentation and process will go smoothly, and the chances of landing high bids on your business listing will also be more likely.
Strategies for evaluating and updating your value proposition
We’ve talked about the important role that a value proposition plays in your business while also discussing matters like how you can effectively communicate this information to prospective buyers.
Many people will create a value proposition for their business when they first start the planning process. This means that you might already have a value proposition, but it may be outdated. Things change over time, and your business might have experienced significant growth since those early days. Still, the existing proposition gives you a great opportunity to show how your business has grown and even estimate the potential for future growth.
With this said, you shouldn’t hand out the old proposition as it is. While you can use it, make sure you update it and thoroughly evaluate its content. In fact, it’s important to regularly update your business plan, financials, and your value proposition.
The first thing to note is any changes you have made to the business after the date when the proposition was drafted. Maybe you expanded with another branch, or perhaps you added more products to your catalog. These are things that you’ll need to add to the existing proposition to ensure it is up to date. You’ll also need to update any financial information that is part of the proposition. Add the financials in terms of expenses, income, and net profit for the years that are missing. Make sure you include this data up to the time of updating the proposition, as this will give the prospects more information to work with when they evaluate your business.
Update the template for the proposition as well. If you created the document a few years ago, then there are likely better technology and design templates available today. Remember that you want to present the proposition in a professional way, so it’s important to ensure it looks good when you hand it out to a prospect.
Conclusion
Your business proposition value is a crucial document to get ready before you decide to put it on the market. There are a number of things that you need to ensure you include in the proposition, and the goal is to give potential buyers a clear view of what your business will offer them. Consider the tips we shared in this post to help you get a better understanding of how you can take advantage of the value proposition.