10 metrics to drive a successful sale
In order to drive up the price of your sale and give yourself a strong position from which to negotiate the sale of your business, consider taking the following metrics to any potential buyers. Giving them as much information as they can handle will reassure them that they are buying a business that has always had its future growth built into its very structure and processes.
Metrics about engagement convey how your business drives growth through its interactions with current and potential clients/customers. This can include social media metrics, such as growth of media channels and particular insights on the sorts of posts that build growth and engagement. Also try to communicate clear links between social media and a conversion to sales. Website analytics such as bounce rates (how many people leave your website after spending time on only one page), conversion rates, organic searches (how people find your website), SEO efficacy (how your website content is marked by search engines) and time spent on site can help give potential buyers a clear idea of what path they should follow in continuing your business’ engagement.
Conversion to sale
If your business is a retail business, how many people who enter your doors actually turn into paid customers? How many enquiries to your bed and breakfast turn into bookings? What insights can you get from this about what ticks people over from being just interested parties to customers?
Quantity of sale
You can apply this metric to both potential and eventual customers. Listing the quantity of actual sales (or whatever form of service you derive your income from) will give buyers an indication of how your business has grown since its inception. Listing the quantity of previous potential customers (if you can measure this) will help create opportunities to convert these potential sales into real income.
Quality of sale
What was the monetary value of each sale or service? What were your outgoings in producing this service and then what was the profit following any considerations of tax, depreciation, amortization and interest? Consider researching the concept of EBITDA (Earnings before interest, tax, depreciation and amortization) as this can be a good way to value your business.
Type of sale
If you can, provide potential buyers with metrics related to the various forms of service you offer or sales you pursue and receive. Use this metric as a way to suggest and show opportunities for growth and diversification in the future.
By providing data and information about staff retention, you are giving a buyer a clear idea of what sort of business they are buying. If you have high level of staff retention, this can be something really rely on in driving up negotiations during the sale process. If you have a high turnover rate for staff, consider analysing why this was and see if there were any changes to the business made that drove these changes and so turn this into a message of growth, rather than managerial failure.
Customer retention and type
Like staff retention, customer loyalty and retention will demonstrate the extent to which your business has diversified its income streams. You want to be able to demonstrate through this information (both customer retention rates and what sort of customers you attract) that your brand is bigger than you are. Buyers want to know customers aren’t going to leave once you do.
Cost of customer acquisition
What has been your approach to attracting customers? Do you spend money on social media engagement? What other marketing tools do you engage with and do these/should these cost you money? Even if you have not engaged strongly with customer acquisition, use this metric to suggest ways in which a potential buyer can drive growth. They may want to know of ways they can help build the business, rather than buying a business that has peaked in its potential.
On top of the financial documents you provide potential buyers, you can also provide metrics that show the nature of your outgoings. Couple this information with a message of lessons you have learned and ways you have targeted your outgoings to minimise losses. Suggest further options for reducing/shaping outgoings to the buyer that you can use this metric to support.
See if you can provide a metric or series of metrics that convey the effectiveness of your interior processes. This can be staff effectiveness before and after the implementation of managerial/structural processes such as staff restructuring and training. These sorts of metrics will give buyers are clearer idea of what it is your staff do and whether they have grown as individuals within your company. Showing that you have always driven employee’s professional development also shows that you have been interested in the long-term prospects of your business, promising a smoother transition during the sale.