This post is sponsored by Transworld Business Advisors of North DFW
If you’re thinking about selling your business, think twice. Selling a business should never be a spur-of-the-moment decision. You must first figure out IF you should sell, WHEN is the best time to sell, and WHAT you need to consider before selling.
Tiffany Schwartz and David Cheek with Transworld Business Advisors are passionate about educating business owners about the process of selling businesses, and they realize that most business owners are an expert at their particular business field… Not the financials in general, and many have no idea what the process of selling a successful business entails.
Owners will ask me, ‘Can’t I just sell this myself? I want to save the commission and do it myself.’ It might seem like the easy route, but as an owner, you have no idea what your business is really worth. You have no idea where to start. Plus, you are, of course, emotionally attached to the business… It’s hard to separate and objectively determine its true market value.”
The lengthy process of selling a business first involves accurately pricing the business based on earnings which is a more complicated process than it might seem up front. David warns…
Determining accurate pricing may swing work both ways. You may be overvaluing your business, but you also may be undervaluing it and potentially missing out on thousands or hundreds of thousands of dollars.”
After an accurate selling price range has been established for a business, next financial recasting must take place. Financial recasting are statements of the business which are adjusted to reflect the actual financial benefits of business ownership. Recasting helps give potential buyers a clear way to compare the earnings of the business to other similar businesses and to calculate potential future earnings.
Finally, to successfully sell a business for what it is worth, the business needs to be successfully marketed to the appropriate potential buyers. Characteristics of a qualified potential buyer could include:
- A solid business history and background
- Secured financing and adequate capital
- Asks the right questions about the business
- A firm grasp on the acquisition process, and
- Having “heart” in the process.
Because of the intricacies involved, Tiffany and David highly recommend that business owners preparing their business for sale connect with a reliable broker.
Of course, that process can come with its own pitfalls,” notes Tiffany. “Brokers can pop up and disappear quickly. In the state of Texas, brokers aren’t regulated with the same scrutiny as realtors, so it’s especially key to be careful about whom you hire as a broker to represent you and your business correctly and ethically during the sale.”
One of their top tips? A legitimate broker should have a physical office.
The broker should feel like a ‘real’ business,’ Tiffany says. Professional websites, competent staff, and efficient office administrative systems will indicate the level of professionalism needed for a serious brokerage firm.”
Look at their website,” David adds. “Many brokers are only marketing on sites like BizBuySell.com. Transworld, however, is marketing to business buyers and sellers on 165 different websites. At the very very least, the broker should have an ‘ELITE’ status on BizBuySell.”
The number of sites on which a broker markets their businesses for sale directly effects who sees the business which impacts the owner’s ability to sell the business for its real worth. Tiffany and David urge business owners to ask brokers a lot of questions, including whether they co-broker.
Ask them how long they have been in business,” Tiffany encourages. “We’ve been in business for 36 years, but in today’s landscape, brokers can pop up, make a splash, and then disappear overnight.”
Considering selling your business? Connect with Transworld Business Advisors to learn more about the process and find out the potential worth of your business.