Think of a business broker like a real estate agent for your business. You wouldn’t sell your house without working with a real estate agent, and you shouldn’t sell your business without working with a business broker. A business broker can help you with all of the steps in the process of selling your business. They will help you by starting with the valuation of your business and take you all the way to the end of closing the sale.
While it might seem like a good idea to keep as much of the sale money as you possibly can, you should know that you might actually be losing more money by trying to save some of it.
1) Business Brokers Know How to Sell & Negotiate
Unless you have sold businesses before, it is not likely that you are going to have as much success as you would like when selling your own business. Even if you are a salesperson, you should allow the business broker to do the sales work for you. They know how to sell businesses and how to negotiate with sellers so that you get the best price for your business.
2) Business Brokers Understand the Process
Since business brokers sell business day in and day out, they know the process like the back of their own hand. Instead of stumbling through the process blindly or hoping that you remember everything, you can allow your broker to smoothly take care of the whole process.
3) Business Brokers Have Connections
Business brokers build connections with business buyers and sellers. Building connections and understanding the process of buying and selling is their whole job. Instead of trying to find interested buyers by yourself you can tap into their large networks and have multiple people interested in your business. The more potential buyers you have interested in your business, the more likely it is that you are going to get the price that you want for your business.
4) Business Brokers Are Not Emotionally Attached
When your business brokers get an offer or someone that is interested in looking at your business, they don’t have an emotional attachment that may cloud their judgment. Emotional attachment can sometimes cause problems with deals so allowing your broker to take care of the majority of dealings with potential buyers is a good idea.
5) Business Brokers Save Your Time
When you are running your business, you don’t have time to vet buyers. Your business broker does have time to vet your potential buyers and will only bring serious buyers to the table. Time is money and when you are trying to sell your business, you can’t afford to spend too much of your time out of your business. You need to focus on keeping business as usual going and even increasing business profits.
When you are choosing a business broker, it is important that you find brokers that are experienced. If you can find a broker that is experienced in your industry, that is even better than general experience. Ask for referrals and information on past work so you can make sure that they know what they are doing and know how to handle your business.
Selling a business isn’t something that you can decide to do one day and do it the next, it requires that you prepare properly for the sale of your business. Your books must be in order, and you need to have your exit strategy in place so things will go smoothly when you transition your business to the next owner. It can take a while to sell the business and transition it, especially if you are selling it to someone outside of your industry. Having a business broker to help you through the process will make everything simpler.
Article appeared in Financetwitter 16th October 2018
Just because your business was affected by governments restrictions relating to covid, does not mean that now is bad time to sell. I have had many enquires from business owners questioning the value of their business both before and after covid, and the result of either increased or decreased sales. My general advice is that buyers have been aware of changes to the business environment, and habits of typical consumers. They are aware of business support and job keeper which will appear on financials. If you have questions about this or anything to do with business sales, feel free to give me a call on 0417 303 196 to discuss.
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I am amazed at the amount of automated business value tools available on the internet. Many business brokers have them on their websites, or other sites they own which are designed to ‘get you in’. That’s a bit harsh you might say, but that is the reality. If you, the business vendor, thinks it is as easy to just enter some basic information into some fields on your screen, then receive a “valuation” or an ‘appraisal’ of what your business is worth, then you will believe anything. To your credit, you, like most people probably fill them in out of curiosity more than anything, but the catch is this – and you probably know what I am going to say……… You provide the company with your contact details in order to receive the valuation which is the whole point of it from the companies side of things, AND, the valuation will be stacked on the wrong side of the scale , most likely WAY higher than it should be to get you, the vendor, to eventually like what you are hearing and come on board to list with them. That’s it. That’s why they offer this “tool”. Please be smarter than that. The reality is, and yes, my job is to be realistic, that PROPER valuations and appraisals are very complicated. They ARE NOT BASED on earnings and profits alone, but many factors and issues have to be considered in order to give the correct advice.
By way of example –
2 Cafes, identical is size, income, profitability, fitout etc. You input these details into the “tool” and you probably get the same “appraisal” right ? What this “tool” cant take into account is one cafe has a 20 year lease and the other has 2 year lease with a demolition clause which has been enacted. I can tell you now these cafes would be valued at entirely different amounts and the reality is one of them probably would never ever be able to be sold, so what is it worth……..NOTHING……. But But But – the internet broker tool, it said Id sell for $350,000…………. C’mon. These “tools” are a gimmick. Don’t waste your time with them or the “Agencies” who utilise them. They are just after your information to “turn ” you into a listing. Shop around.
A franchise is a way of structuring a business. Generally, it involves the owner of a business (known as the franchisor) licensing to a third party (known as the franchisee) the right to operate a business or distribute goods and/or services using the franchisor’s business name and systems (which varies depending on the franchisor) for an agreed period of time, in return for a fee.
Franchising has grown rapidly in Australia in recent years, particularly in the small business sector. Annual revenue from franchising exceeds $100 billion and franchises employ over 500,000 people.
Its success can be attributed to the fact that franchising provides incentives to both franchisors and franchisees, as they both share in the success of the business operated by the franchisee.
WHY WOULD YOU BUY A FRANCHSE?
There are many reasons why someone would buy a franchise. For example:
THINGS TO CONSIDER
When conducting due diligence, make sure you address the following: