In case you are thinking of selling your business, you have two options. You could either hire the services of a broker or sell it privately. If you want to keep your identity private, the best option would be to use a broker. In addition, an experienced broker will save you the trouble of having to deal with legal matters and negotiating prices. However, there are also benefits to selling your business privately:
- Eliminate commission fees – If you hire a business broker, you will have to pay them a particular percentage of the sale as commission. Some brokers charge fees which are unreasonably high, thus eating significantly into the profits from your sale. Selling your business without involving a broker will help you to avoid paying commission fees.
- Represent your business better – No business broker can ever know as much as you do about your business. If a potential buyer has any questions, you would be the best person to provide information. Selling your business privately allows you to deal directly with the potential buyers. People are more likely to make a purchasing decision when they get information directly from the business owner.
- Sell your business faster – Selling a business through a broker can be a very long and frustrating process. However, things will move much faster if you are directly involved in negotiations.
The following are some guidelines for selling your business without a business broker.
1. Prepare early
If you want to sell your business, you need to start preparing as early as possible. This will give you a chance to improve your business structure, customer base and financial statement. Making such changes will help you raise the value of your business.
2. Business valuation
Many people make the mistake of pricing their businesses too high or too low. To avoid this mistake, hire a business appraiser to ascertain the worth of your business. You can then base your asking price on this appraisal.
3. Prepare documents
There are several documents which are important when selling your business. This includes lease documents, financial statements and operation manuals. Potential buyers would also want to see a list of your current clients and suppliers. Gather all this information and make copies to distribute to prospective buyers.
4. Find a buyer
One of the best ways of finding buyers for your business is by getting it listed online. There are several sites which allow you to list your business for sale. This includes bizquest.com, bizbuysell.com and businessesforsale.com. You could also use offline strategies such as posters, flyers or newspaper adverts. After receiving offers, take the following steps:
- Shortlist three to five potential buyers
- To protect your information, ask the potential buyers to sign a non-disclosure agreement
- Be flexible when negotiating the price but know your limits
- Hire an attorney to handle legal documents such as non-compete agreements, bills of sale and assignment of lease
Selling a business privately can be a very emotionally draining and time-consuming task. You can learn more about buying and selling businesses by reading materials available online. It would also be advisable to attend business workshops and seminars in your area.