How Much Will It Cost To Sell Your Business?
How much will it cost?
There are several options available to you when it comes to sale of your business, each with their own benefits and potential drawbacks.
You can sell the business yourself, sell it through a business sales professional, or if you’re a franchise you may have the option of selling through your franchisor.
Your decision should be based around your own personal circumstances such as the cash you have to invest in your sale, your experience in business sales, motivation to sell, preferred time-frame etc.
Here's a few useful tips around each of the three courses of action.
Private Business Sale - DIY
Selling your own business may be an option worth exploring, as long as you have the time and the patience to do so, whilst ensuring the day-to-day operation of your business does not suffer for it.
There is the advantage of avoiding paying any commission on the sale. A HUGE bonus.
However, where do you start on selling your own business? First of all you need at least a ball park valuation. Our Free Tool can help. You then need to write a document to provide to any would be buyers. This is generally called a Business Profile, or Information Memorandum.
Once this is done you can write your advertising and start promoting your business for sale. Plan to spend at least a couple of thousand dollars to advertise the business yourself on the key business sales websites. Without proper investment into your advertising, your time on the market and sale price can suffer.
With the right advertising you should see some enquiry on your business and you can begin talking to potential buyers who have signed a confidentiality agreement. It is important to keep the emotion out of any discussions with buyers as their aim is to push the price down and yours to maintain it at a level you would accept.
Finally when you find a serious buyer, who you have checked can actually pay for the business, negotiate the deal and draw up the legals with the help of a lawyer and your accountant.
A private sale is often the best option for any business that will likely sell for less than $150,000. Signing up with a broker with a sale price lower than this can mean you're bottom of their priority list, and your business may struggle to get the attention it deserves.
The fact is, the higher the commission on offer, the higher the drive.
But there are some very cost effective methods for selling your business yourself. If you wish to talk to us about this, don't hesitate to Contact Us.
Sell with a broker
As in many sales roles, business brokers can have a bad reputation, but rest assured there are excellent brokers out there. The key is to pick the right one, which means knowing what questions to ask that cut through the bravado, and shine a light on their true skills and level of care.
Here are the major points to consider:
Signing up to a broker means you get a serious sales professional who has real experience. Their sole purpose is to put deals together and get your sale across the line. They will take the entire process off of your hands, allowing you to keep doing what you do best.
Brokers often have access to mass market exposure which means more buyer enquiry. They may even already have your buyer waiting in their database.
The right broker should be an excellent negotiator. If you find this kind of sales professional, and your goals are aligned with a reasonable percentage commission in place, they can achieve you more for your business. In some cases, paying for their fees and more.
Having a third party between buyer and seller can often be the difference between a deal getting done or not. When buying and selling a business, there is obviously a lot of money involved and emotions can run high.
An experienced business broker will act as a "punching bag" between both parties to make sure everyone wins.
Of course the best brokers don't come cheap. There will be a commission to be paid at the point of sale which can range between 6-10%, but remember this helps motivate your sales agent to work hard for you.
Also, $2000-$5000 investment is not uncommon in order to prepare your businesses representation and for advertising.
If you would like for us to put you in touch with a trusted business sales expert in your area for an Obligation Free Chat just click here and head on over to our contact page. Let us know when is a good time to touch base.
Sell with your franchisor
If you own a franchise, checking in with your franchisor as a first port of call is smart (and often required as part of your Franchise Agreement), however there can be some risks in leaving the responsibility of selling your business in their hands alone.
They may already have your buyer waiting that could even be franchise approved already. This is of course the ideal scenario as a buyer can take several weeks to progress through the franchise acceptance process alone.
There is rarely a representative that has your best interests in mind. As an exiting franchisee, you have to ask yourself "what are the franchisors motives for my business sale?"
Chances are your franchisor’s focus is on the entering franchisee having the least amount of financial pressure, and highest chance of success. They may not necessarily be focused on you achieving the best price for your business.
If you'd like to discuss the risks and rewards in dealing with your franchisor to sell your business, don't hesitate to send us a message by clicking here and we'll touch base at your convenience.