When a business owner decides to sell their business, they are faced with two different paths to follow; yet both have risks.
Owners can choose to do it on their own or bring in a team of specially trained professionals to manage the process for them.
The easy part for those who want to do it themselves is calling to tell a prospective buyer that their business is for sale. The hard part is minimizing the risks associated with such behavior.
Imagine the impact the news of a pending sale would have on a seller’s business when their competitors, customers, employees and suppliers find out.
Also, time spent trying to find a buyer is time diverted from making sure business remains as profitable as it can be.
An additional disadvantage is limiting the seller to a small pool of prospective clients. Similar to selling a house or an automobile, a seller should create excitement by marketing their business to as many potential buyers as possible.
When deciding to bring in a business broker, sellers need to understand that all brokers are not alike. There are a number of characteristics to look for.
One of the basic traits is credibility, which comes in many forms. For example, if the broker says he can get the seller’s asking price or more, be wary. Since owners sometimes overvalue their business, sellers must be cautious if the broker says he can meet or beat expectations.
Be wary of brokers who want an up-front fee. They get owners excited about making promises and then have them write a check before any marketing has begun.
Sellers also must make sure the broker represents a wide selection of businesses, and even more importantly, make sure they are selling quality businesses.
Nothing diminishes a broker’s credibility quicker than a list of unprofitable businesses for sale.
Another trait a professional broker must have is confidentiality. Sellers need to understand how and when their broker will share their business with prospective buyers, both locally and nationally.
A broker must possess experience through a proven track record and should be able to produce a number of referrals. If a broker is unable to explain to a seller what makes a successful transaction, they’re not likely going to be able to explain it to a buyer.