The Australian Small Business Blog

Thursday, October 04, 2018

Selling a Business

by Dr Greg Chapman

Selling a business is much different to selling a property, a car, real estate or anything for that matter. The process can be relatively simple and seem easy though this is where most people go wrong.

Business Brokers charge fees upwards of 5% and have been known to charge 5k plus in initial marketing. This is where most small business owners decide to take on the role of selling a business by themselves.

Two quick facts :

1) Up to 80% of the Private businesses advertised NEVER SELL

2) Of the small number that do sell, 1% actually sell for the asking price

This is not a good way to finish up after many years of hard work put into the business.
Below I cover some points on how you can drastically increase your chance of a sale if you want to have a try at selling the business yourself.

The first thing you will do after you have decided to sell your business is research similar businesses to try put a price on yours. Each business is different and really can't be valued the same way as property or a car by just looking online and guessing. I strongly recommend having a proper business valuation of your business. This will help you justify your asking price, give you a true value of your business and not just an opinion based on your own research.

The next thing you want to look into is your financial records, at least three years worth of records. I see all too often private sellers with messy books who think that if the buyer is to come in and watch the take way or cash business that it will be enough. IT'S NOT. Its imperative you get your books right. Who wants to buy a business based on trust?

What you want to look for when selling your business is who is getting results, this information can be found by doing some basic research into businesses for sale, small businesses for sale and specific types of businesses for sale by typing into Google the businesses you are after.

Something to look out for is sponsored links, these are paid Google links that someone with a brand new website can simply pay their way to the top of the search results with no longevity, meaning the site may show up one day but not the next. Paid links are usually only sustainable by large companies like seek and real commercial as they can afford to pay their way through.

What we are looking for though is results so we want to see some consistency in the websites we are looking to list on in the organic search for keywords relating to businesses for sale.

Once you establish the top two or three websites I would recommend listing on all of them.

This may cost up to $500 to list however a fraction of the cost of running a campaign in your newspaper for 6 or 12 months or trying to list on each site by yourself.

Some sites like even have an option to list on all the major websites for a small fee.

Lastly you need to have some good copy in your advertisement with some bright quality photographs; you are writing an advertisement, you want it to look appealing. You can hire copywriters or write a simple advertisement yourself but at least make it appealing.

With a proper business valuation, financial records, good copy, bright photographs and advertisements on the top 3-4 websites, you will place yourself in front of nearly all your competitors and give yourself the best chance of a business sale.There is always the option of exploring a professional to do all this work for you, a business broker.

The beauty of business brokers in one word is: contacts ! Business brokers do charge big fees though can be justified through results. After a recent conversation with one broker in particular some of the large size businesses get sold without even hitting the market as such. This is where you can leverage off the expertise of a business broker and their contacts within the market. Just be careful when choosing the right business broker.

Don't hesitate to contact me if you are looking for any advice on selling your business online and I hope this was of some assistance to you.

Nicholas Lowther - Director of Australia's Fastest growing business for sale website

May Your Business this Year be - As You Plan It.

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Dr Greg Chapman is the Director of Empower Business Solutions and is Australia's Lea ding Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success and Price: How You Can Charge More Without Losing Sales.

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