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What Are The Pros And Cons Of Selling A Business For Sale By Owner?

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Comments & Replies: 2     Views: 1455     Posted By: Joe Ranieri  

What are the Pros & Cons of selling a business yourself? I get asked this question all the time and would like to share with other Intermediaries on BizBen all the angles of business owners taking the initiative and selling their own business.

Topics: Business Brokerage, Selling A Business     Tags: for sale by owner, selling a business



I usually qualify a seller before I go out and meet with them. I ask the seller some questions to make sure they understand that I only take exclusive listings, so neither of us end up wasting our time. Once in a while, and more often earlier in my career, a seller will tell me, "I don't want to do an exclusive listing, only open listing, because maybe Iíll be able to sell it myself." I never try to "hard sell" them or make the potential seller feel like they are wrong, because I was once a retail business owner, and so I can understand where they are coming from. I have sold hundreds of businesses and a seller may have only been involved in 2-3 transactions, if that, and so aside from saving money on commission, they may not know of the pitfalls that come along with that. I've learned that if you treat the potential seller with respect, and they do try selling it themselves, and it doesn't work out, they will come back to you when they do end up listing it for sell.

PROS

The Commission

Obviously, saving money on the commission is the number one reason why most sellers end up trying to sell it themselves. Who doesn't want to walk away with more money in their pocket? It's understandable.

Flexibility

One of the benefits of selling the business yourself is that you are not obligated to be with one business broker for a term of up to six months. There is no intermediary, and so you can sell the business, in your own words, to every potential buyer and explain why they should by it.

Control

If you are selling yourself, you donít have to give up the reigns to someone you donít know. An owner who sells it themselves, knows exactly the type of marketing being used, who inquired about their business, and directly what is the reaction to the market their business has.


CONS

Exposure

Many of the listings in my inventory feed off themselves, as an example, they come in looking at a 5-day coffee shop, realize itís not for them, and end up looking at a deli.

Confidentiality

This may be why many opt to list with a broker rather than sell it themselves. It's sad, but true, that many businesses for sell do not end up selling, and so itís important to have as few key people as possible know itís on the auction block. Meeting with buyers off site is essential, because an owner doesnít want someone coming into their business and saying, "hey is this the place to sale?" in front of employees and customers.

Getting The Deal Closed

I could say limiting liability, because the broker has all the correct forms and knows the timeline in which they are executed, but I find the greatest benefit a broker has in a transaction is solving problems that occur throughout the transaction. The broker often acts as the driving force during the transaction and keeps things moving, because the longer a transaction takes, the more likely the deal doesn't get done.


  Helpful Resources To Assist In Selling And Buying California Businesses

Helen Yoo: Escrow & Bulk Sale Services - Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 800-864-0420.

Diane Boudreau-Tschetter: Escrow And Bulk Sale Services

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses

Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.

Joel Miller, Broker Specialist, Elderly Care Services

Senior Care Services Specialist - Business Broker, Consultant, Due Diligence: Elderly Care Homes, Assisted Living Homes, Adult Residential Facilities, Hospice, Congregate Living, Independent Living, Care Services. Areas: San Diego County, Orange County, Inland Empire. Joel Miller at 619-866-4310.

Chuck Post: Laundry Buyer Representation, Consulting, Due Diligence

Chuck Post has 32 years experience in the laundry industry, specializing in assisting laundry buyers (and entrepreneurs) with buying or starting up, building, re-tooling, laundries throughout California. Laundry buyer representation, consulting, due-diligence, lease negotiations, laundry valuations.

Janet Carrera - Escrow & Bulk Sale Services - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Jack Oh, Business Broker - LA, Orange Counties

Business broker and real estate services in the Los Angeles and Orange County areas. 10 years experience with great negotiating skills. To sell a business or buy a business in the LA or Orange County Areas phone Jack and his team at 562-787-4989.


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Workshop 9/9: How to Find Profitable Businesses For Sale Not On The Market

Workshop: Find Businesses Possible For Sale Not On The Market - Seal Beach Location. Date: Saturday 9/9: 1:30 PM to 5:30 PM. Call 800-864-0420 for more information or to register. Willard Michlin, CPA will be presenting this workshop.

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