Selling a Business: Should You Hire a Broker or Do It Yourself?
While you may have made the decision to sell your business, the process isn’t quite as straightforward and seamless as you’d think. According to Entrepreneur, insufficient preparation and overconfidence are the two biggest mistakes people make while putting their business up for sale.
While you may have heard of countless success stories involving an entrepreneur who sold their business for millions and rode off into the sunset, there’s a lot that goes on behind the scenes that people don’t catch a whiff of.
From careful forethought to extensive planning and collaboration with brokers, putting a business up for sale requires meticulous effort and research.
Despite the conscientiousness required in the process, there has been an increase in people selling their business with little to no external help from professionals.
If you’ve been struggling to decide whether you should sell your business yourself or recruit a team of professional business brokers, we’ve rounded up the ultimate breakdown to help you get started.
1. Business Valuation
As one of the most essential processes involved in selling a business, a business valuation determines the economic value of a company unit or business. Whether you’re selling a business because of retirement, divorce, health, or family obligations, a quality valuation will help you set a competitive price.
While you may feel compelled to undertake the painstaking process yourself, it’s very likely that you’ll lack the expertise, experience, and industry insights required to set an appropriate value.
Determining the best price demands a foundational understanding of the three business valuation methods—namely, asset-based approaches, earning value approaches, and market value approaches.
A superficial understanding of each will ultimately result in a weak price that doesn’t do justice to the value of your business.
This can ward off buyers and may even depreciate your business’s value if it’s listed for too long.
Contrarily, qualified and licensed business brokers are equipped with the tools, skills, and expertise required to set the best price for your business. In addition, their extensive experience means they’ve sold countless businesses in the same industry.
With a plethora of unique insights and resources, they’ll conduct a methodical and rigorous business valuation process that gives your business an added layer of protection.
It’s no surprise that Entrepreneur listed an unwillingness to leverage professionals as the third biggest mistake to avoid when selling a business. By adding over 10–12% to the sales price, professional brokers make the business valuation process more convenient and profitable.
Not only will they help you sell your business faster, but their accurate price will also help you steer clear of questionable offers.
Investing in a similar extent of market research is simply not feasible for business owners. While you may develop an understanding of local trends, there’s no way for you to gain insights into past fluctuations and potential modifications—each of which is essential in determining what sells and what doesn’t.
2. Reaching Potential Buyers and Marketing Your Business
Promoting your business is one of the best ways to reach potential buyers who are genuinely interested in investing in your business. Despite your well-intentioned efforts, it’s unlikely that you’ll succeed in expansively marketing your business on your own.
Contrarily, professional business brokers have extensive networks that help them efficiently reach a large base of eager buyers. In addition, their market insights help them ascertain the specific features potential buyers are interested in.
By marketing your business accordingly, they help attract a pool of relevant high-quality buyers who are willing to set forth a great price. By taking care of promotional and marketing needs, brokers get the message across, thereby doubling and even tripling chances of a lucrative sale.
3. Ensuring Confidentiality
Selling a business requires meticulous discretion to ensure employees, fellow employers, customers, suppliers, and competitors are unaware of the proceedings. This can pose to be a challenge for individuals who are representing themselves.
On the contrary, business brokers ensure complete confidentiality by contacting approved buyers through a blind profile. This roundabout process helps protect the identity of the company.
While a general summary of the company is disclosed to approved buyers, sensitive information—including the name and location—is tactfully withheld. This protects the identity of the company and prevents news from spreading—which could be injurious to brand identity and reputability.
While you may take measures to ensure confidentiality yourself, the process tends to be extensive and time-consuming. Business owners who try to sell their company themselves struggle to ensure that each potential buyer will sign a confidentiality agreement and that they won’t participate in a breach of confidence through unfair means that are hard to detect.
In addition, the marketing process also requires careful information dissemination to ensure the company’s identity remains private. These processes can be hard to navigate without recruiting professional brokers.
4. Handling Multiple Offers
As your listing garners attention from potential buyers, you’re very likely to be flooded with a plethora of offers. If you have an extensive team assisting you, you may manage to handle multiple offers and shortlist buyers accordingly.
However, embarking on the process yourself is an impossible feat to accomplish.
Experienced business brokers use state-of-the-art technology and cutting-edge software solutions to effectively shortlist buyers, thereby introducing business owners to top-tier buyers with excellent offers.
In addition, they use their market insights and expertise to determine the seriousness of each buyer, resulting in efficient time utilization and no risk of having to deal with spurious buyers.
5. Effectively Negotiating and Closing a Deal
As one of the most crucial stages of selling a business, negotiating and closing a deal carries an immense amount of pressure.
Professional business brokers have excellent negotiation skills that help them close a great deal without getting caught in the web of unrealistic buyer demands and tactics. In addition, they help execute a timely sale, thereby lowering the risk of legal complications.
By managing all legalities in advance, they further prevent business owners from getting entangled in the complexities of assets, shareholders, contracts, and agreements.
Ready to sell your business? As one of the leading business/real estate brokerage firms in Florida, we specialize in small to multi-million dollar businesses and commercial real estate investments. By offering over 3000 businesses for sale covering 86 business categories in 67 counties in Florida, we’ve helped countless buyers and sellers successfully actualize their goals.
With over 30 years of experience, we’ve emerged as one of the most trusted professional brokers across the nation.