Getting the timing of your business sale right can make a significant difference to the offers you receive, but it is particularly important when your business is seasonal. Seasonal businesses follow a cycle in which activity peaks at certain times of the year. So, with common examples of seasonal businesses depending on summer weather, such as tourism and outdoor activities, now is the perfect time to prepare. John Hatt, the Managing Director of Business Partnership, gives his tips on selling your seasonal franchise.
Timing is everything
When the time comes to sell you seasonal franchise, there are many factors to consider. The first is the timing of your sale. Although this may seem trivial, the timing of your sale matters a lot if you want to get the maximum sale price.
But why does the timing matter? Say you are trying to sell a campsite or caravan site franchise in autumn at the end of the main holiday season. A buyer may have at least the winter and part of the spring ahead of them where little or no money will be coming in – this, in turn, affects the sale of your franchise. Now, add to that the fact that a lot of maintenance and improvement work will happen in the offseason to minimise disruption. Your buyer is now looking at a purchase price plus added maintenance costs yet may not have any paying guests until Easter. This means the best time to sell is usually at the beginning of your peak season because a profitable and growing business will always attract more buyers and reach higher prices.
The main exception is when a business will need significant work or investment before it can begin to make a profit. Buyers are unlikely to choose a business that needs improvements at the start of the peak season as they will miss a season of profits. In this case, selling during the offseason can be more effective. However, it is also worth considering whether you can make the improvements yourself so you can sell for a higher price when business is about to boom.
Preparation is the key to success
Selling any business will take time. Although prices and demand are likely to peak near the start of your busy season, you should start preparing for the sale ahead of time. One advantage of selling a seasonal business is that you can use your offseason to get your business ready. In the offseason, you will have time to maximise the value of your business by investing in essential equipment, tackling any potential dealbreakers, and making sure the business is ready to hand over.
Since your business cannot simply be valued on the last few months of sales or the averages for the year, it is essential to have monthly or even weekly sales breakdowns at hand. Your buyer could be parting with a large amount of money, so they need to know how reliable your in-season sales are, how they build to their peak and how quickly they decline. For example, this would be gradual for a campsite. If you sell Christmas trees, this peak and decline will all happen within one month.
How to improve the chances of a good sale
To improve your chances of a better sale and try to eliminate some of the seasonality, one thing you can do is diversify. Try to bring in new ideas to continue your income through your off-season. For example, creating content for your blog, improving your website, growing your social media presence, and finding creative ways to reach potential customers. Then push all these buttons once the season heats up again to help grow your database of contacts.
You could brainstorm one-off events, services and products that would sit well in your business and fill the off-season income gaps. For example, if your franchise traditionally supplies wedding hampers, why not introduce baby hampers, Christmas hampers or summer festival hampers to boost income and, therefore, the value of the business.
When it comes to selling your seasonal franchise, there is not just one season. Florist franchises can have multiple seasons, with popular celebrations, such as Valentine’s Day, Mother’s Day, wedding season and Christmas. A clothing franchise generally has the four seasons of spring, summer, autumn, and winter where the collections change. By understanding the seasonality of your franchise and following these tips, you can significantly increase the offers you receive when selling a seasonal franchise.
