Sell Your Business on Your Own
Sell your business on your own and therefore should you be a FSBO (For Sale By Owner?)
It’s a good and valid question if you own a business. The final answer to your question I expect comes after doing some research. Here are some thoughts to consider in your decision making process.
Who is the buyer of your business?
One of the first questions to ask when you are selling anything is who would be the buyer of it? If you own a business, perhaps a potential buyer is a family member, a friend, a neighbor, an employee, a competitor or perhaps even your landlord or supplier.
If you are able to identify a potential buyer and you are now ready to sell, the first question to ask is “have any of these potential buyers asked me before about buying my business?” If any of these potential buyers have asked before but you weren’t ready, at least you know that thinking about owning your business was on their mind. If they have not asked you before and not asked you recently, if you were to approach them to see their interest, the first thing to be prepared to do is lower the price you may expect to get from selling your business. Why do I say this? The reason is simple. The sale of a business from the seller to the buyer only takes place “if there is a motivated seller and a motivated buyer.” If you have now become a motivated seller and you let possible buyers know, they will want to test to see the degree of your motivation and the first place they will start is asking you if you will accept much less than you would be willing.
How much does the buyer know about running a business?
If you talk to a family member, neighbor or employee, how much do they know about owning and operating a business? Chances are they know little to nothing or they would be doing it. For them to buy your business you are going to have to teach them. How long did it take you to learn to run your business? How much of your life did you have to put on hold while you went through the business ownership learning curve?
If they are a landlord or supplier, the good news is that they are in business, so that’s a start. However, a landlord is a landlord for a reason while a supplier is also a supplier for a reason. Hopefully they know how to be in the business of being a landlord or a supplier which means they would know little to nothing about owning and operating your business.
Sell your business on your own to a competitor?
What about selling your business to a competitor? Selling your business to a competitor is without doubt the hardest of your options. As soon as a competitor finds out your business is for sale they will want to know more; and the reason is obvious as it’s for competitive reasons. Competitors love to compare. They want to compare your gross sales to their gross sales. Your Cost of Goods to their Cost of Goods. Your cost of rent compared to how much they pay. The number of employees you have to their number of employees and how much they are paid compared to what they do. The comparisons go on and on.
Sell your business on your own and keep it confidential?
Before you share confidential information to a competitor you can have them sign a Confidentiality Agreement. However, if they are interested the hard part will be getting them to make an offer. Another hard part will be not sharing every detail with them including negotiating their offer and then actually having the sale close. If the sale doesn’t close, the hardest part will then be not having any damage done to your business.
There are some people that wish to sell their house using the For Sale By Owner model. Selling a house is very different to selling a business. When you sell a house it’s relatively easy to find the right price to list the house for sale. You then put a sign out front and let the world know you are accepting offers and when you get an interested buyer you take them through and show them every room and once they get their finance organized, close the sale.
As a professional that sells businesses and medical practices I need to understand financial statements so I can correctly present the business for sale. I need to research and understand what the market will pay for a business like yours and put together a valuation you understand and share it with you. I need to find what lending will be available for your business as I want as many eligible buyers as possible being able to buy your business and almost without exception, they will need a loan to help finance the purchase. I also need to have the ability to discreetly and extensively market the business so I reach as many qualified and motivated buyers with complete confidentiality.
If you own a business what do you do best? The answer is own and operate your business. When it’s time to sell, bring in a qualified and experienced professional so they can focus and be motivated to help you sell your business and move to the next phase of your life. My role is to work behind the scenes with the activities of valuing, listing, marketing, qualifying buyers, working with your landlord and ultimately selling the business. Let me do what I do best which is get the best price possible for your business and handle the entire process. Will you be involved? Absolutely. The business only sells when both buyer and seller are fully informed and want to close the deal.
Are you thinking about selling your business and move to your next challenge? Would you like to know the value of your business? If you would like more information please visit my webpage Business valuation. For more immediate help you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.