“Let’s do a quick drive-by.” Every decision I’ve ever made to buy a piece of property started with that phrase. What do we check on the drive by? Curb appeal.
Jim Grebey knows small business curb appeal is different. “Show me the value!” Jim explores small business curb appeal in this excerpt from his book Moving On — Getting the Most from the Sale of your Small Business.
Does Your Business Have “Curb Appeal?”
“Curb appeal” is one of those terms that has become highly overloaded. “Curb appeal” has a different meaning in the sale of a business than it does in residential real estate sales. In residential real estate, curb appeal refers to what a buyer will see “from the curb” when driving by the property. There are no drive-by sales in business. Curb appeal for a business means demonstrating, to the greatest extent possible, why your business’s value proposition makes buying your business a good investment and worthwhile opportunity. “Curb appeal” in business is when a potential buyer sees the transferrable value of the business demonstrated.
Improving the curb appeal of your business includes cleaning up and preparing the external image of the business so that it appears successful. It also requires being prepared to demonstrate all facets of the business’s operation to a potential buyer. The business needs to be honestly positioned and appear as successful and professional as possible. For example, an online web business with no operating facility still needs to work on its curb appeal by making sure the image it presents to a potential buyer, based on its website and financials, demonstrates the transferrable value a buyer will be interested in. Business sales require a sufficient level of buyer analysis to entice them to look further—and hopefully, eventually buy. Your job is to prepare the evidence needed to convince the buyer that it’s worth their time and money to look deeper. They should not have to dig too deeply to find value in the business.
In Jerry McGuire Tom Cruise and Cuba Gooding Jr. famously shout, “Show me the money.”[1] What a buyer wants to shout at you is “show me the value.” You can’t just tell buyers about the value in your business; you must be prepared to demonstrate the value to them. That is how a business generates curb appeal. Unlike residential real estate, improving the curb appeal of a business requires going more than surface deep. I’m not knocking how difficult it is to sell residential real estate. I’ve tried it, and it’s not an easy way to make a living. Residential real estate sells to a different market with different motivations than a business sale.
The sale of a business requires a clear understanding and demonstration of your business model. Even though you are in “selling mode,” you need to limit the amount of puffing you do. Puffing means overstating the features or value of your business. When “we have the greatest kitchen in town” turns out to be a false statement, you have probably lost the buyer (who will be thinking what else you might be exaggerating or which is simply untrue). “Our kitchen is small, but we made it highly efficient to support our menu” is a much better selling statement. A bright, clean, highly efficient kitchen is a better marketing statement than anything you might say.
If part of what you are selling includes the capabilities of your team, it’s not sufficient to simply show a buyer the resumes of key employees. There should be a history of performance bonuses and creativity or other awards, acknowledgments, etc. hanging on the wall where buyers can read them while they are on tour. And yes—it’s also good for employee morale, which is also a great selling feature.
As you start positioning your business by determining what potential buyers will be looking for, search for a way to put the answers to those questions in front of them. If your business is a retail store located in a strip mall, it should look like the most successful business in the mall. You want it to be obvious to a buyer why shoppers are attracted to your store, why these customers want to come into your store, and why it is more attractive than another store they might also be considering.
“We knew buyers would be interested in our production speed, so we posted production charts in the shop because we understood that would be a discriminator for our sale.”
The answers to a potential buyer’s questions should be obvious. If you’re selling a restaurant, the kitchen, the dining room, and the restrooms should be sparkling clean, and the buyer should see how efficient your service is. If your business is a light manufacturing company, the shop should look well maintained and organized so a buyer can see how efficiently your assembly line works. If your business is a software development company with a staff of young, highly energetic engineers, it should be obvious you have created an energetic environment that challenges the staff’s creativity. I had one client who put in a pool table and sponsored after-work activities for their engineers because they recognized that their team had more ideas in group settings than they did working at their desks. One of the greatest chances to make an impression on a buyer is when they first walk in the door. You know you’ve struck gold if their reaction is “wow, this is just what I’m looking for.” That type of reaction doesn’t come by building a fake facade over the front of the building like an old movie set. You must clean up, improve efficiency, and make changes that encourage creativity and motivate staff. Creating curb appeal for a business means painting, polishing, and cleaning, but more importantly it means preparing to demonstrate the transferrable value in the operation of the business.
Jim Grebey is president of Diligent Inc., which provides positioning services for small businesses preparing for a sale and operations due diligence services for investors. He is the author of Moving On — Getting the Most from the Sale of your Small Business, published by DeGruyter, and Operations Due Diligence — An M&A Guide for Investors and Businesses, published by McGraw Hill
[1] “Jerry McGuire, directed by Cameron Crowe (Culver City, CA: Gracie Films, 1996), film.
