Before Kim Scurry joined the mergers and acquisitions group of one of the largest technology companies in the world, she bought and sold Wizbang Hats. I spoke with her about what she learned about buying and selling a small business.

Buying Wizbang

At age 46, Kim was reconsidering her career choices and was thinking about buying a small, established business in order to test her entrepreneurial chops without risking her life savings. After two years of casual hunting, circumstance and opportunity came together in April 2012 when Kim came across Wizbang Hats in Bozeman, Montana.

How Can You Add Value?

It was important to Kim that she buy a company that fit her interests and strengths. She'd come across lots of businesses for sale, but none seemed to need what she was particularly well suited to provide. In Wizbang, Kim found a match. The founder had been most interested in product development and had neglected sales and marketing, two of Kim's strong suits. With Wizbang, Kim understood how she would add value to the business.

Don't Let Your Emotion Get the Better of You

Kim loved the company, really liked the founder, and had a clear understanding of how she could create value through developing sales and marketing. In retrospect, she may have loved the opportunity a little too much. That is, her enthusiasm may have diminished her appetite to negotiate harder. As a consequence, Kim may well have left money on the table.

It's a tough balance. On the one hand, the fit – including a degree of passion for the business – is important. Success comes hard and requires commitment that's tough to fake for an extended period of time. On the other hand, falling in love with a deal is the bane of many a buyer. Overpaying puts you in a financial hole that can be extraordinarily difficult to climb out of.

Selling Wizbang

After buying and operating the company for two years, Kim decided that her entrepreneurial experiment had run its course. Experience had confirmed her capacity to manage all the varied aspects of a small consumer products company, including sales, marketing, product design, hiring, manufacturing, and finance. However, Wizbang wasn't large enough to fully support her financially, which meant Kim was living a second life as a half-time consultant. Something had to give, and Kim concluded that growing Wizbang aggressively would require changes that would make it less fun. So, she decided to sell.

Take Time to Prepare to Sell

Having a propensity to act, Kim didn't waste time selling the company. Looking back, she feels that was a mistake. In her experience, it takes time to position a company for sale – maybe a year or more.

Although prospective buyers need to see evidence of the potential for growth in your business, they are unlikely to pay a premium for anticipated improvements in profit. After all, realizing those profits is likely to take their sweat and equity. Kim found that current profitability is the major driver of perceived value. Consequently, managing expenses with an eye toward near-term profit often makes sense if you are preparing to sell your company.

Craft Your Business Story

What makes your brand special? Where is the untapped potential? Why haven't you pursued such potential? These are the kinds of questions to which potential buyers want answers. Make the effort to craft and hone your business pitch. Collect real customer stories and anecdotes that will provide buyers with a real reason to believe.

Create a Buyer Persona

When you are developing a product, it makes sense to craft a highly detailed persona – a profile of the person you think is your most likely buyer. By personalizing your customer, you can be more empathetic to their needs and objective and, thus,