Your business has probably been a labour of love over the years and most sellers just like yourself have sweated and sacrificed family life and finances in order to have a successful business and its now quite possibly at a point where it is profitable and ”ready” for a new buyer to just walk in and reap the rewards of your hard work.
Rightly so, you would expect to derive the best possible selling price for the business….but here is where there should be serious caution placed on the next step. Overpricing your business for sale will lead to damages equal to what a fledgling business suffers. I have seen far to many business sellers ignoring our calls for placing caution on overpricing their business and that business then lands up going stale on the market and in it gets seen as a ”bad” business because ”nobody wants it” so it is assumed it’s a bad investment.
My best advise to sellers is to use the services of an experienced broker and to pay very close attention to selling price guides or this business will sit on the market for months and months…..buyers who buy businesses worked hard for their money, businesses are not financed like properties over 20 years….the buyer wants a risk versus rewards deal….nothing more, nothing less. They often do not make emotional decisions but business decisions.
The other reason to use the services of a business broker versus selling the business yourself privately is that you need to keep your business profitable and retain your focus on driving turnovers and profits. The sales process is the golden period and you only have one shot at it. If there is THE SLIGHTEST drop in turnovers or profits during the selling period, then this will be seen as a business that ”is taking a downward turn” and you will be faced with a huge challenge….that challenge equals one thing…..a drop in price of 25% to 35% to be able to sell. All to often I have seen not only a business that has already gone stale BEFORE it came to us, but the sellers had to land up doing an equipment sale only as the ”going concern” part of their business had all but vanished.
Brokers typically charge anywhere from 5% to 10% commission on the successful conclusion of a sale and no upfront marketing, valuation nor listing fees should be charged. The broker should work totally on risk or he is just out to get upfront money while faintly trying to peddle your dead horse. My synopsis is therefore simple…the fee charged by the brokers pales in comparison to the losses you could suffer….get a professional to help you.
RAAL NORDIN is an experienced business broker, property franchisor and frank advise offerree.
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RAAL NORDIN, URBAN LINK 