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

Comments & Replies: 2     Views: 7373     Posted By: Joe Ranieri  Joe Ranieri, Business Broker: LA, Orange County Areas

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 I ll 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 don t have to give up the reigns to someone you don t 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 it s 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 it s important to have as few key people as possible know it s on the auction block. Meeting with buyers off site is essential, because an owner doesn t 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
Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence

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 805-428-2063.

Helen Yoo, New Century Escrow - Escrow Services In 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.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

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.

Shalonda Chappel-Pilgram: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

Elizabeth McGovern: Escrow Services - San Francisco Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Larry Larsen: Laundry Consulting, Brokerage, Insurance

I have over forty years of experience in the sales, ownership, management, and construction of coin laundries. He is a licensed broker active in the sale of coin laundries, a licensed insurance agent specializing in coin laundry insurance. Phone me at 714-630-9274 or 714-630-Wash.

Joe Ranieri, Business Broker: Orange, LA County Areas

Having owned retail/restaurant businesses for over 20 years, my interest turned to listing and selling businesses rather than owning them. I specialize in LA & Orange County high volume restaurants, fast food independents and chains, bars, & liquor stores. Call 714-292-5448 Cell/Text.

Mike Brewer: Liquor License Broker, ABC Consulting Service

Liquor license brokerage and consulting services. We provide: Alcohol License Transfers Application Consulting & Processing, Liquor License Purchases & Sales, City Zoning Permits & Land Use Entitlements, Public Convenience or Necessity Findings and Letters. Phone Mike Brewer direct at 800-437-1100.


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FREE Sat Seminars: Best Practices When Buying Or Selling A Small Businesses

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