Originally posted on Forbes.

What challenges might I face in selling my business during a recession and how can I overcome them?

Businesses are sellable during a recession, but it really depends upon the industry, your expectations, whether or not your business is operating on all 6 P’s, and how profitable the company is.

COVID-19, for example, affected certain industries more prominently than others, such as the hospitality and travel industries. While it is certainly possible to sell during a recession, if your business struggled then it may be best to wait to sell when your business is thriving again allowing you to maximize value. Buyers are willing to pay top dollar for businesses that are profitable and generating strong cash flow, allowing them to recoup their initial investment sooner rather than later.

Regardless if your industry was faltering during a recession, however, if your business is operating on all 6 cylinders, or 6 P’s, you may still be able to maximize value during a recession as these are the characteristics all buyers look for in an acquisition. The 6 P’s are as follows: People, Product, Processes, Proprietary, Patrons, and Profits.

People refers to the management and employees that are currently employed by the business. Committed employees and tenured management teams can act as a value driver as they are directly involved with the direction and growth of your business.

Products are the products or services that are offered by your company. When looking at your business, you should ask yourself whether your product and industry is thriving or dying and if it services a niche.

Processes refers to operating procedures and systems, policies and procedures, and SOP checklists. Your processes should be designed with the customer experience in mind and should be well-documented.

Proprietary refers to any intellectual property your business has such as brands, trademarks, patents, databases, contracts in place, IP real estate, etc. IP can act as one of the biggest value drivers of your business.

Patrons refers to your clients. The most important thing is business is customers as customers bring your business revenue. You need a diversified, loyal client base who will go out of their way to purchase your products and services.

And finally, profits refer to your company’s EBITDA (earnings before interest, taxes, depreciation, and amortization). Do you have multiple congruent revenue streams and residual income? Remember, however, profits are never a problem, but a symptom of not operating on the other 5 P’s.

Ensuring your business runs on all 6 cylinders is key to selling during a recession.

Written by Michelle Seiler Tucker, author of Exit Rich and founder of Seiler Tucker Incorporated.