Selling Your Business "By Owner"
You have options when selling your business. Many business owners decide to rely on professional brokers, while others decide to market and sell their companies themselves. Independent sellers are called FSBO (For Sale By Owner) sellers, and they represent a growing portion of business owners who list establishments for sale.
Unlike previous generations, today’s business owners have access to all the market data, information, and platforms they need to effectively value, market, and sell their businesses on their own.
Why Do Business Owner Sell Independently?
Owners Know Their Business Best
Most business owners believe they are the best person to represent their company. They are the most familiar with their company’s strengths and limitations, and therefore best qualified to sell their business to potential buyers. They enjoy talking about their business and feel confident they can generate interest in the marketplace. In addition, most business owners are born entrepreneurs and expect to apply the same hard work and common sense to maximize the price and minimize the time the company sits on the market.
Access to Necessary Information
Sellers have access to a wealth of information and market data. Sites like BizBuySell not only help sellers to market their business to potential buyers, but also provide education and valuation resources to help them prepare and sell their business.
Save Money
FSBO sellers do not pay broker commission. For obvious reasons, many sellers choose to take on the responsibility of selling their business themselves and avoid the added cost of a broker. This means handling the marketing, prospecting of qualified buyers, as well as the negotiation process themselves. While it's a significant commitment in terms of time and energy, there is a material savings to be had.
Manage Each Step of the Process
FSBO sellers remain intimately involved in the sales process. Many sellers consider this a huge advantage because it keeps them in the loop with buyer interest and helps them gauge the expectations against market realities. Business owners with a “hands-on” leadership style may prefer this level of involvement rather than work through a broker.
Risks of Choosing the FSBO Method
Lack of Experience Can Be a Disadvantage
Selling a business is a specialized transaction and requires a certain level of expertise. To be done effectively, owners need to actively seek out all the necessary resources and religiously integrate them into their sales strategy. Moreover, FSBO sellers may find it beneficial to consult with their attorney or accountant for reassurance and confidence throughout the transaction.
Emotional Attachment to Business
Selling a business can be emotionally taxing. Selling a business that an owner has spent years building can be a very emotionally difficult process. Negotiations can become tense and stressful, and the owner may find it difficult to make the best decisions. In contrast, a broker can create an often much-needed buffer between buyer and seller and offer an objective perspective.
Distraction From Continued Business Operations
Selling a business may interfere with running the business. Selling a business, including taking a business to market, finding qualified buyers, and managing the negation process can be extremely time-consuming and can interfere with running the business itself. Lack of attention to running the business can results in a loss of customers and revenue, which is one of the last things an owner wants when attempting to sell their business for the highest value.
Vetting Interested Buyers Can Be a Grind
Finding the right buyers may be challenging. Unless you already have a buyer in mind, such as a family member, competitor, supplier or employee, identifying a qualified buyer can be tiresome. You may find yourself wasting valuable time and energy with buyer prospects such as tire-kickers or would-be small business owners that lack the ability, means or desire to actually close the deal. In contrast, experienced brokers are very skilled at quickly identifying prospects who are qualified buyers and serious about purchasing your business.
(To learn more about what to expect from a broker, see What Will a Business Broker Do For You?)
Choosing the Right Approach
BizBuySell offers a pre-existing conduit that links sellers directly with buyers. FSBO listings are ideal for owners who feel they can effectively facilitate the sale of their business and manage their business at the same time. Yet, a business sale is a specialized transaction that requires a certain level of expertise as well as an objective perspective. While some owners may feel confident in their ability to go solo with a FSBO listing, others may feel more comfortable handing off the responsibility to an experienced business broker.
Start by joining BizBuySell, and setting up alerts for businesses similar to your own to get an idea of what they're selling for. And if you want to talk to a business broker, see our directory.