Do you really need a business broker to sell your business?
Last week we revealed exactly why hiring the services of a business broker can easily increase your chances of selling your company quickly and at a higher price. Is it strange or contradictory therefore that I am now releasing this post that is outlining exactly how you can sell your business without the inclusion of this business selling angel?
Right, now that I’ve answered that. I’ll see you next week. Thanks for reading.
Oh, very well, I’ll embellish:
There are advantages to NOT using a business broker to sell your business.
We touched upon this in our last post (https://wesellanycompany.com/blog/how-to-choose-the-right-business-broker-to-help-sell-your-business/) but there are certain types of business that really do not need a broker to help with the business sale and these are micro businesses or lifestyle business.
Not every business is a huge conglomerate with a massive turnover and a sizable staff needed to handle the day operations. Many business owners run their business purely to give them a comfortable wage and for something they can pass on to their loved ones when they retire. Selling your business yourself can save you – as the business owner – rather a lot in brokerage fees.
According to Forbes:
“It’s true they (brokers) provide good services for their share of the pot, but the internet has leveled the playing field in one of the most important services they provide: marketing your business.”
Google has become the ‘go to’ option for shoppers looking to buy almost anything these days and business investors are no exception.
Today’s shameless plug…
Every one of our posts is crammed with useful free information to help you buy or sell your business and we shamelessly add one plug and here is todays:
Wesellanycompany.com enlists the help of a Google consultant to help with the promotion of our clients businesses for sale. They know exactly where your prospective buyers are, the exact phrases they type into Google, the types of websites they frequent and what will entice them. This vastly increases the opportunity for your business to be seen by the right people and at the right time.
Right, now back to the free info:
No one is going to love your business as much as you
Before we embark upon the 5 top tips to help you sell your business without a broker, remember your small business may well be a labour of love. As such, a business broker will never feel the same way about it as you. Their incentive is (for the most part) financial and their monetary reward is likely to be greater the bigger the business they are dealing with. If we were to assume that on average a business broker is selling 20% of the businesses on their books then what size company do you suppose they give most of their care and attention to?
Tip ONE: Get a true business valuation
My father was a music enthusiast and decided to sell his 8 track recorder. He popped it on EBAY with a ‘buy it now’ valuation of £6,000.
Guess what, no one bought it.
Because his valuation was what it was worth to him and what he wanted to receive – not what people were willing to pay.
The hard truth is: Your business is only worth what someone is willing to pay for it.
Multiply your profit by two, and this can offer a rough estimate on your business valuation. If you own a freehold your business could be worth up to ten times your profits.
Tip TWO: Bring in specialist help to sell your business
And, no I’m not referring to a business broker, rather a lawyer and an accountant. Unless you are a trained lawyer, well versed in mergers and acquisitions of companies, then the right legal help is essential in helping you through negotiations and other legal matters.
An accountant can be very useful in providing you with a no nonsense business valuation and will help you decide upon an appropriate asking price. Business owners getting their business valued in this way can be safe in the knowledge that experienced investors will not look at your proposition as to cheap or dear.
Having that evaluation to hand ahead of time can also help you decide whether or not your potential reward is even worth your placing your company on the market.
Tip THREE: Protect your intellectual property
Draw up a Non Disclosure Agreement (NDA). Competitors may not be interested in purchasing your business and are simply looking for information on your business. A NDA can help to protect your IP.
Tip FOUR: Make yourself replaceable
No one will want to buy your business if the business is likely to slowly collapse like a flan in a cupboard once you have gone. Make sure that the day-to-day operations of the business don’t need you at the helm to succeed.
Tip FIVE: Strategically target potential buyers
The most obvious place to look when selling a successful concern is to your competitors. If you are turning over a healthy profit and as such, taking business from another company then how valuable might it be for them to own your company, your IP and your customer base?
Some competitors may purchase your company purely for your IP, especially if you have bespoke technology that enables them to produce their wares at a fraction of the cost than they currently pay.
Tip SIX: Consider online platforms to help sell your business
Yes a free extra tip…
There are a plethora of online aids to assist the weary business owner present his company for sale to prospective buyers and – some are better than others.
Placing your business for sale on a dedicated website can save time on waiting for the right buyer and also save on brokerage fees.
The most popular small businesses that sell on these sites are in retail, food, service and digital businesses.
That’s the good news. The bad news however is that 95% of the businesses that elect to advertise on these sites do not sell. There are a variety of reasons for this; chief among them is the business valuation is considered to be unrealistic.
Do your homework before advertising on the site. Look at exactly what they are doing for you. Do they simply pop your advert up there with thousands of others with nothing to separate your business from others or do they go that extra mile in marketing YOUR business to your ideal buyer?
We will go more into online marketing strategies in our next post.
Thanks for reading. If you have any questions or would like help buying or selling a business then click below and one of our friendly, yet highly knowledgeable trained professionals will be in touch.