After feeling the effects of the recession, water well drilling businesses are again on the rise. According to IBIS World, the Water and Sewer Industry as a whole took in $52.3 billion last year, with water well drilling making up a large portion of that. Over the next five years, the industry is expected to see continued growth, making it a great time to consider selling your business. The task may seem daunting, but there are things you can do now to ensure a smooth sale. If you plan to sell your water well drilling business now, or in the future, consider these tips for finding the perfect buyer.
Work With an Experienced Business Broker
As an expert in the water well drilling industry, you understand the importance of working with experienced professionals. You’ve likely come across do-it-yourself customers over the years that quickly realized they couldn’t do it themselves, and that’s when they called you. Selling your business should be no different. The process to sell a business can be detailed and time-consuming. A professional business broker can take the task of selling your business off your hands, so you can continue to focus on what you do best—running a successful water well drilling business.
Determining the value of your business is one of the most challenging tasks in the sales process. Pricing it too high may turn off prospective buyers while pricing too low could leave potential profits on the table. Business brokers know every business is different, and they can draw from their vast knowledge and experience to determine the best valuation for your business. They will also leverage their network of contacts to locate interested buyers, and, more importantly, vet them. Not everyone can jump into owning a water well drilling business, and your business broker will want to be sure that your buyer is prepared to run the company. While each sale is unique, working with an M&A professional, skilled in business sales, will streamline and shorten the process of selling your business.
Prepare Your Business for Sale
Often, prospective buyers are looking to purchase a successful, well-managed business, rather than a business they feel needs a lot of work from the start. Therefore, to find the perfect buyer for your water well drilling business, you need to put the business is the best position to sell. Tie up any loose ends before you list your business for sale. Whether you need to repair drilling equipment or renegotiate contracts, do this before a prospective buyer steps foot inside. Fill all vacant positions with highly qualified employees, and be sure they are well trained as well. The more turn-key your business is, the higher a potential buyer will value your business.
Clear and organized financials are also key to a sale. You should plan to show profit and loss statements from the last three years, tax returns, and balance sheets. Have industry numbers and future projections on hand, and be prepared to articulate the value your business adds to the industry. If you are running personal expenses through the business, now is the time to stop. Concise and straightforward financials will give prospective buyers the overall impression that the business is organized and well managed.
Sell When the Time is Right
While it may go against your business owner’s logic, the best time to sell a business is when the business is going well. Your water well drilling business may be in a season of growth, causing you to want to ride out the good fortune as long as you can. It’s understandable to want to stay with a business when you are seeing success, but it may also be a risk. Prospective buyers also want to get in when the business is going well, and they will often pay a premium to do so. It’s hard to know when market conditions may change, or when a competitor begins to siphon off your customers. To find the perfect buyer for your water well business, sell when your business is doing well.
Not only should you sell when it’s the right time for the business, but you also need to consider when it’s the right time for you. Once you’ve invested years of time and hard work into your water well drilling business, it’s understandable that you’d be hesitant to walk away. All too often, business owners feel outside pressure to sell, only to get cold feet at the last minute. Meet with a business broker when you are truly ready to sell your business. Motivated buyers are more likely to find the perfect buyer than those that feel uneasy every step of the way.
Be Patient
One benefit of selling your business when things are going well is time. Business owners often wait to sell until they are forced to do so, whether because of health, financial problems, or other factors. Waiting until you must sell puts you in the position to take the first, not the best, offer on your business. Placing your business for sale when you don’t have to sell takes the pressure off you and gives you the freedom to wait for the perfect buyer for your water well drilling business.
On average, it typically takes around six to nine months to sell a business. While you may be tempted to accept the first offer you receive, it’s possible that being patient could pay off in the long run. Working with an M&A professional will help to find the best possible buyer for your business, and it will ensure the process goes as smooth as possible. In the meantime, continue to work and grow your business, while you patiently wait for the best offer.
Finding the perfect buyer for your water well drilling business may seem overwhelming, but there are things you can do to make the process more manageable. First work with an experienced business broker that can take the guesswork out of valuing your business. Next, prepare your business for sale. From hiring employees to organizing financials, be sure that your business looks presentable to prospective buyers. Finally, sell when things are going great, and be patient as you wait for the perfect buyer. Contact an M&A professional to determine the value of your business and begin the sales process today.
Scot Cockroft is the Owner & President of the #1 ranked Business Brokerage, Business sales and M&A firm in Texas. Scot has been named Named Deal Maker of the Year by Dallas Business Journal.
He is committed to a “different” type of business brokerage firm, one that is NOT about a sales pitch but, rather, results! In short, a business brokerage firm that is committed to performance-based compensation. Scot believes in these principles as well as a candid honesty with clients. His candid style often takes buyers and sellers by surprise, but is often what assures successful connections between the two.
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