There are a couple of options available to you when it comes to the method of selling your business, each with their own benefits and drawbacks and of course costs.
You can sell it yourself, sell it through a business sales professional, or if you’re a franchise, through your franchisor.
Before making a decision on which method suits you best, the first area to cover off is the 3 keys to achieving a successful sale. If you get these right, you will achieve the quickest sale possible, and for the best price available to you in the current market. These are:
Your Asking Price – if this is too high buyers simply wont make offers, or if it is too low, you’ll undersell. (if you need help with this, click here to book in a free phone appraisal with a Bonza Sales Expert).
Your Advertising Reach – How greatly you advertise your business for sale – one you have chosen a professional and experience service you trust to handle the sale, it then comes down to getting the attention of as many buyers as possible. After all, you cant sell a secret!
Your Representation – The quality of the representation your business sale has. Many of our new customers have sad stories of deals, just weeks away from settlement, falling over simply because the buyer found something they were unaware of, such a discovering a rental bond of $10k was needed. This is enough to knock a deal over for most buyers. The documentation that is sent to your buyers needs to be detailed, and contain everything they need to know to make a decision. The firm that represent your businesses needs to be experienced and quick to follow up your buyers.
Now that the 3 key to a successful sale have been covered, here is some more information about the different methods of selling your business and the approximate associated costs:
Being for sale privately is often a first port of call for many business owners. The attraction of doing so is obvious, low upfront expense and zero commission. But selling a business is no easy task, and if you’re serious about it, you want to make this decision carefully.
As we discussed above, you have to make sure you tick all 3 of the above “Keys To A Successful Business Sale” in order to get from being For Sale to SOLD!
If you plan to try it yourself, you need to make sure you can gain plenty of buyer enquiry from the places the real buyers are looking (websites like SEEKBusiness, AnyBusiness etc), follow up your enquirers quickly, and have your documentation compiled professionally ready for your enquirers to view.
If you can manage the aspect, you are well on your way. The only other area to be aware of is the support your buyer will likely need. Most business buyers are first time buyers. When making a decision to buy a business, fear will play its role at some stage, and its critical someone be there to explain the buying process clearly to the buyer, so that nothing shocks them down the line, and support them through to completion.
If you’re uncertain of what to price your business for, feel free to book in an appraisal with a Bonza Sales Expert by clicking here.
The benefits of using a business sales service (brokerage) are also obvious. They should bring to the table experience, advertising power, current buyer database, assistance with price setting and more. They of course require some level of investment though.
The key to picking the right company to represent your business for sale means asking the right questions before hand. This allows you to cut through the bravado and sales pitches to get to the nitty gritty of what you need to know to make a call. For example. an company that offers “No Upfront Costs” sounds great, but if you’re only advertised on a couple of websites, and the compiled documentation for your business is of low quality, what chance do you have of selling? Here are the major points to consider:
1) Experience – Does the party have real business sales experience? The need to have experience with selling other businesses within your industry is a common misconception of business owners. The company representing your sale needs to be good at selling businesses, they don’t need to know the in’s and out’s of your industry specifically. Often brokers who focus in one industry use that sales pitch to help get more clients to list with them. A good choice will be a company that has sold businesses across all industries. This shows their true business sale prowess.
2) Advertising Power – Where does the company advertise your business for sale? The goal for you is to make sure no stone is left unturned. All serious buyers are looking on the business for sale websites these days. Its the easiest method for them of filtering which businesses match their needs, and tracking businesses of interest. Make sure your chosen representative is on all of the major business for sale websites, and ideally Facebook.
3) Handling of Enquiries – Having a third party handling your enquiry takes a lot of pressure and time off of your hands, allowing your to continue the running of your business. It also ensures your buyers are getting handled by an experienced professional, so that if the buyer has a chance of buying your business, they are in the best hands.
4) Professional Representation – Whatever your buyer receives after they enquire on your business is critical in their decision making process. You need a document that compiles everything the buyer needs to see to make a decision at that point, and that explains the buying process for them, making them feel comfortable to make an offer.
For a more detailed comparison of Bonza Business & Franchise Sales vs. your typical business broker services, please click here.
Be careful of websites out there that promote advertising your businesses on business for sale websites who also “offer support” throughout your sale process. This is all well and good, if the service has real business sales experts to support you, otherwise what kind of support can they really offer other than sending enquiries your way?
If you own a franchise, checking in with your franchisor as a first port of call is often smart (plus “First Right Of Refusal” is often required in your Franchise Agreement), however there can be some risks in leaving the responsibility of selling your business in their hands alone.
Obviously, the head office may have a buyer waiting that does not want to purchase a greenfield site. The buyer may be already franchise approved which speeds things up for you.
On the other side of the coin, does the head office have your best interest in mind? You want to achieve the best possible sale price, in the quickest possible timeframe. A registered business sale service has the same goal in mind. What is your brands head office main focus? Do they have someone solely working towards selling your business? Is it important to them what price you sell for?
Some food for thought.