The process of selling a business is a long journey that typically starts with courting a number of potential buyers. Once you have a few parties interested, there will be management presentations and hopefully multiple offers to buy your company. After evaluating the offers, you'll likely need to agree to one of them in principle and give your preferred buyer exclusivity to perform their due diligence before they hand over the check.
One of the final tasks of diligence often involves a prospective buyer talking to your customers. After you've spent years getting your business ready to be sold and months negotiating with buyers, it may all come down to a conversation between the acquirer and your customers. In fact, getting your customers to say nice things about your business may be the final hurdle you have to overcome before selling your business.
In his new book, The Referral Engine, John Jantsch outlines a formula for creating a referable company. I asked Jantsch to provide his best advice for becoming referable. Here's our exchange:
Q. I think all business owners would like more referrals. I know your book offers a system, but what one thing would you recommend business owners do today that would immediately get them more referrals?
A. It's not something tactical that you can do today; it's a matter at looking at your entire customer experience and finding ways to be more referable. Plug the gaps in each client contact, add ways for customers to get to know more about you and your people, offer trial products that let people test the experience, make the experience of becoming a customer the same as when you were courting the customer, measure the value you are giving, and find ways to improve and increase your contacts.
Q. One of the elements of creating a sellable business is creating a business that's not reliant on the owner. What's the secret of generating referrals for a business (as opposed to for the founder personally)?
A. I tend to agree that it's pretty tough to sell a business that's a personal brand—go to work on getting yourself out of the marketing department, or at least out of being the rainmaker. Until you can delegate the generation of leads and referrals by creating a success system, you'll have a tough time convincing someone else they could do the same. I know it's not too sexy, but documented systems, even for selling, are the key.
Q. Assuming you have identified a possible company to buy your business, how can you get someone to say nice things about your company so that the acquirer will get interested without you having to declare that your business is for sale?
A. Well, I don't think you simply convince people to say something nice about you as an event. This is something you start today. Ask every customer why they buy from you, what you do that others don't, if they would refer you and why. This line of research needs to be part of the culture of continually understanding how to get better, how to create a better experience. Do this for any amount of time, and you'll earn the right to get your customers involved in sharing their testimonials and success stories as an integral part of your marketing.