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Six keys for selling a business

Sep 1, 2010 12:00 AM

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In any company, neglecting to carry out a business plan throughout its entire life cycle can negatively impact its value when ownership decides to sell. Six critical elements must be in place before executing a successful sale of your print and graphic communications operation:

  • Sales & marketing | Too often, sales and marketing are ignored to the point that revenues either flatten out or actually begin to decline. Flat sales are satisfactory to some, but when looked at more closely, flat sales indicate that inflation is outpacing volume and profits are falling. Hence, cutting investments made in sales and marketing is not a wise decision or an effective way to make profits look more inviting.

  • Personnel | This industry requires that businesses are well staffed in all key disciplines of sales, customer service and production. When achieved, a business will operate more efficiently, to the point where the business can progress without constant owner oversight. A seller should not overstaff his or her business, but rather hire and retain good, experienced people in key positions who will continue with a new owner.

  • Technology | Unlike before the Digital Age, when reinvestment in technology was not a major factor in valuating a business, in our industry today it is critical. If one does not, at minimum, continue to reinvest in key prepress technology, digital output to press and digital printer, as well as upgrade bindery capabilities, it will be all but impossible to remain competitive. And clients today are more sophisticated — they expect value-added services like mailing, promotional products, signs and banners and web-to-print services. The mistake of not diversifying into these growing segments might cost you more than just the printing revenue moving to digital media.

  • Curb appeal | Although you shouldn't judge a book by its cover, most buyers do. A facelift and strong curb appeal will do wonders to impress a potential buyer and will instill pride in your staff members. Going to another city to tour several other similar businesses (other print centers, Kinko's, Staples) is one way to obtain ideas for your facility. Put yourself in your customers' and employees' shoes and decide where the best place would be to do business or to work. Then, put yourself in the shoes of a potential buyer and ask, “Is this a place I would like to come to work every day?” The answer might surprise you.

  • Profitability presentation | Equally as important as employees, business processes, and appearance is a business' presentation of financial figures. This is where the rubber meets the road for sellers when placing a value on their business. Overall, the most important factor sellers should be focused on is how well the business is positioned to sustain and grow sales and profits. Generally, owners are only as good as their last few months. If a seller is producing strong sales and profitability, it is prepared for a safe succession.

    One highly regarded valuation method is presented in Larry Hunt and John Stewart's “Print Shop for Sale.” Hunt and Stewart provide suggestions on how and why marketing, sales, technology, people, and financial results influence the valuation of a print center. We use this book at Allegra Network, in combination with other valuation methods, with both buyers and sellers for our MatchMaker and Acquisition Programs, whereby we provide an exit strategy for independent print and sign shops.

  • Creative financing | In today's economy, the majority of small businesses in the United States, including print centers, require owner financing when being sold. Sellers should be prepared, mentally and financially, to finance a portion of the sale. While this might be hard for some owners to swallow, if a business is appropriately positioned to be sold, it will command a fair market price or potentially an even better return with interest at a rate that should yield as much if not more than mutual funds or fixed income securities.

    Maintaining some vested interest in the future of the business with some watch dog controls that can be included in the promissory note and security agreement can be a win-win for buyer and seller alike.

Carl Gerhardt is president and CEO for Allegra Network — a print, marketing and graphic communications franchisor linking more than 500 locations in North America and the UK including the brands Allegra, Signs Now, Insty-Prints and American Speedy Printing. Contact him at