Selling a business is an emotional decision from start to finish. What’s going to happen to your business now you’re going? What about your staff — how are they going to cope? Even if you are relatively happy with what you have built and how things are being left, selling a business is a stressful time.
Hiring a business broker may seem like a good way to lessen the strain during this challenging time — after all, they will help with the legal aspects of ownership transfer, ensuring compliancy and continuity. At the same time, are the high brokerage fees really worth it? Aren’t you better off organizing the sale of your business yourself (with some support)? Maybe you don’t need to rely on a business broker after all...
Video: Selling it yourself (DIY) or use a business broker?
Here are some pros and cons of selling a business with or without a professional business broker (FSBO — For Sale By Owner). Make sure you weigh up all the different options: you don’t want to rush this decision — selling your business is one of the most important steps you’ll ever take on your professional journey.
Valuing your business
Business valuation is the first step when it comes to selling your business on; a quality valuation will help you set a fair and competitive price for your business. In order to get accurate results, you should use valuation tools coupled with market data and industry insight. If you are selling via a broker, they will probably have sold dozens of similar businesses already, and will be quick to give you a ballpark figure.
At the same time, no one knows the true value of your business quite like you. Brokers may not have a full understanding of your niche or industry — and you are still the best person to put numbers against certain business assets.
Promoting your business for sale
One of the biggest pros of using a brokerage service is that they will promote your business to their network — increasing the chances of you finding a high-quality buyer.
Video: Pitch-to-Brokers Tool: How it Works
At the same time, you can implement a lot of the same marketing strategies yourself, without the expense of their "little black book". Using digital marketing tactics and strategies like Google Adwords and targeted landing pages will greatly increase the number of cost-effective inbound inquiries.
You should definitely embrace a multichannel approach and explore different marketing platforms and tactics — you will be surprised at the positive results that this DIY approach can yield. Social media shoutouts are always good thing to do, but don’t expect loads of high-quality leads from a scattergun approach. Listing your business for sale on websites and in Facebook groups can also help drive traffic and interest — just make sure you write a killer sales ad.
Going out there and promoting your business yourself can be hard work — there will be a lot of timewasters and dead-end conversations. Learn how to qualify potential buyers quickly, and get out quick if things aren’t going anywhere.
Your business interests
Protect your business interests during the sale by keeping an eye on business brokerage fees and potential buyers.
The best business brokers will be totally upfront and honest about their fees, and will never try to hide costs. Make sure that any business brokers you’re considering have a proven track record, and that you are satisfied with the initial customer service that you receive. Anything that sounds sketchy or too "hard sell" should be a warning sign for you to walk away. A flat, one-off fee is much more preferable from a cashflow perspective, so be wary of any commission-heavy schemes.
You need to learn how to evaluate buyers, measuring them up against each other, and decide which one is really going to be best for your business. Remember, they may not be the highest bidder! You need to delve deep into their business growth plans, and consider whether you agree with their vision. They may not fully appreciate the business or understand the industry, or their business direction may conflict with everything you’ve achieved so far. Some buyers like to keep founders on for a year or so after sale to ensure continuity, so consider whether you would be able to work with the potential buyer.
The legal elements of selling a business get complicated when it comes to staff, premises, assets, shareholders: do you really want to take on all that? The responsibility can be pretty hefty, so consider your options carefully before launching in. There is a lot of available and free advice out there — take advantage of it and read up on the small print in advance in order to avoid any legal pitfalls.
Related: Business Broker Agreement Template
Negotiating a good deal
One of the most important skills you will need to fall back on during a business sale is your ability to negotiate. You need to negotiate a good deal for the business, for yourself, for your staff, and for your buyer! Conversations may get complex and be quite lengthy — a business broker is trained to negotiate, and will be able to navigate the pitfalls well.
At the same time, nothing beats a founder’s passion and enthusiasm — a business broker may not be able to fully communicate the potential of the business in front of them. Being involved in the sales process of your business, and having a bit of support with the more tricky stuff, lets you have the best of both worlds.
Selling your business is a huge step to take. Take your time with it, and make sure that you are really ready to face the challenges ahead. Throwing in the towel too soon may be something you live to regret. At the same time, you will know in your gut when it’s time to move on and let others continue what you have started. Selling your business yourself can be an empowering process, and with all the handy tools and services like ExitAdviser available to you, not as daunting as it once used to be!
About the author
Victoria Greene: Brand Marketing Consultant
My job is perfect: I spend my day collaborating with brands of all shapes and sizes, and dreaming up engaging content strategies to help them grow their online audience. In my spare time, you can find me writing for my blog over at VictoriaEcommerce.com.