How to sell a business without an agent?
Are you thinking of selling property or business without the help of an agent? It can be a very daunting task considering the state of the economy and the volatility in the property market.
But eliminating an agent will help you to save as much as 5-10% on commissions. For instance, on sale of $1,000,000 property or business you can save roughly about $50,000 to $100,000. If you were to sell your business to a family relative, you probably will not need a broker. But, if your business has lots of liabilities and wants to pay back the debt, the agent will be an additional cost along with other liabilities. Huge amount of money can be saved by not involving the agent in the deal. And it is not as difficult as it seems to sell business by owner without the help of an agent. And selling real estate by owner with a sign ‘for sale by owner’ tends to sell more quickly, sometimes in less than two weeks according to the National Association of Realtors’ Survey 2018. Again, as a reminder a dollar saved is more than a $1.25 earned.
There is no better person than the owner who has the knowledge of business in the market for sale. The way in which an owner can answer the queries about the business history, its working, management and operations, market scope, no agent does the same. The owner can provide significantly more value in the process than the agent can. So, it is not that difficult to sell business by owner as it seems; you just have to keep in mind a few important points which are mentioned below.
Advertising your business for sale
Putting up your business for sale and advertising it is the first point. Advertising your business for sale is not complicated either. Nowadays, the digital revolution has made it easy for business owners to find buyers who will be interested in buying the business. There are many websites where you can list your business for sale and find the prospective buyers. These websites are the same platform which an agent uses to market your business. By directly listing your business you can cut the cost of a middleman. The website makes their money by charging money for the advertisements. These fees are generally fixed and are extraordinarily little as compared to what agent’s charge. Some websites allow you to post listing ads for free, but it is generally not advisable because free ads do not get the priority and it might delay the sale of your business.
Finding a buyer is another daunting task. We at FISBO provide a more focused platform to the people who come to us, just like yourself, who are either buyers or sellers. After finding the buyer, the first thing that needs to be done is to complete your research on the buyer. Who is he, why is he interested in your business, does he have the capital or not, will he pay you upfront or in instalments? We at FISBO, will bring you only qualified buyers. We do credit checks to make sure the buyer can make the cash down payment and have financial ability to consummate the deal. Because the last thing you want to do is waste your time dealing with the buyer who has no means of paying you the money upfront or in instalments. If you find the buyer matching all your criteria you can set up a meeting with him and finalise the deal. Owner should be careful and should try not to delay the deal too much because if it seems to the buyer that you are not interested, he might turn away and cancel the deal.
While managing and negotiating a business sale, owners should be transparent in all aspects of the business. Buyers will request information from the seller, in this case from the owner. They will want to see the profit and loss statement, assets and liabilities, sales report etc. We at FISBO, will help you to prepare all the information because it will help them in making the decision to purchase the business. If you will hold back any of the information, it may look suspicious and it will scare the buyer away from making the deal.Even if the reports are bad or numbers are negative, you should be completely transparent with the buyer. As eventually they will go to the banks and then the bank will investigate that information professionally and will provide all the minor details as well. So, it is better to show it in the beginning rather than have them discover later, it will harm the deal as well as your reputation.
The only thing that should not be handed over to the buyer before signing the deal is the list of customers. If the buyer gets the list before making the deal, then he might just contact the customers directly and will form their own business. That is why you must be discrete about specific information until the buyer has signed the contract and agreed to purchase the business.
Accountants and Attorneys
Accountants and Attorneys are the two most important people that come into consideration while selling a business. The one thing you do not want to do is to pay a large amount of taxes after making the sales. Hiring an Accountant is of utmost importance to help you out with the tax information that you need to know before making the deal, and to handle all the financial aspects of the deal. Along with an Accountant, you might want to hire an Attorney to prepare and handle the sales contracts so that you are sure that they are done properly. Agents usually have accountants and attorneys on their payroll who do these tasks for their clients. But since, no agent is involved, you will have to go and hire them yourself. Attorneys and Accountants typically have fixed fees. You can recover the cost of their fees, just let the attorney and accountant know what you want and what you expect out of the deal. Then they will create the contracts and agreements in accordance with the information provided by you.
At FSBO, we cannot represent you as an attorney, but we will be able to give you advice and we are there to assist you at every step on the way except procuring a mortgage.
We know, it is easier said than done. We are here to guide you at every step. We have a team of experts available to make the job easier for you. You can get in touch with us by visiting our website fsbocommercials.com without hesitation if you need any assistance.