Small business owners are great at what they do. They own and operate a business that they have built into a success. When it comes time to put the business on the market, however, many small business owners make mistakes that will end up costing them a great deal of time, energy and money. How do you avoid these types of mistakes? Know what they are and how to avoid them. What follows is part two of a five part series that will help you avoid business seller blunders:
Choosing the Wrong Business Broker
The most successful business sales have something in common- a business broker (or brokers) that know what they’re doing. As a small business owner, you could potentially go out and find plenty of brokers who will list your business for whatever price you demand. The problem with this approach is simple. Your business is worth what someone is willing to pay for it, and a good broker will use market knowledge and a good dose of reality to price your business so that it will sell. Too often business owners will end up with a broker who will tell them anything they want to hear as long as they get the listing. This can become a major issue when your business is priced too high. It will sit on the market and you will wonder if your broker is doing anything to get your business sold.
It can be a hard pill to swallow if your business won’t sell for what you’d like to get for it, but an honest broker will tell you if your desired price is unreasonable or not. A goods broker will also tell you if there are any minor tweaks or fixes you can do to get top dollar for your business.
Another common issue is time. A broker who will let an owner list their business for a completely outrageous price will also likely give a very unreasonable time table for the close of the transaction. The average time it takes to get a business from listing to closing is 9 months. Do businesses sell faster than the average? Sure, but if a broker is giving you any kind of guarantee on a short time frame to closing, you should be suspicious.
The key here is to choose your broker wisely. Ask good questions like: How many businesses have you closed in the last 12 months? What do you think is a realistic asking price for my business and why? How long will it take to sell my business? A great broker will have great, honest answers. A so-so broker won’t.
Have you had a terrible business broker experience? Please leave us a comment or question here, and we will be happy to show you how our services are above and beyond the rest.