An entrepreneur who decides to sell their business needs a successful plan if they want to maximize their profits. Some of the best ways to maximize the profits from selling a business include:
* Increase sales
* Develop a successful business plan for the new owner to follow
* Negotiate better deals with vendors
* Have a strong online marketing presence
But what about lowering your own costs, and saving money when you decide to sell your life’s work? Most business owners look to these traditional methods to increase the profit they realize when they sell their businesses, but very few look to save money by making smart decisions on the services and methods they use to sell their businesses. There is extra profit to be made by understanding the costs associated with selling your business, and then cutting back on those costs.
When you hire a broker to sell your business, you are looking at fees that consist of:
* Six to seven percent of the value of your business
* A minimum fee that could exceed seven percent of the value of your business if your business is smaller
* Marketing costs that you have no control over
When you hire a broker, that broker will charge you a commission when the sale is over. Many brokers also charge you extra for certain types of marketing packages that include services you may or may not need.
If you have a business worth $200,000 with a commission of seven percent and a marketing package that costs $3,000, then you are going to pay at least $17,000 in fees to sell your business (minus the GST).
You can save that money by selling your business yourself. The Internet is filled with resources and comprehensive courses you can utilize that will teach you how to sell your business. By the time you are done, you will have sold your business and pocketed the fees you would have paid a broker.
Many business owners hire legal professionals that call themselves sales advisors to help smooth out the process of selling a business. The problem is that many business owners also hire a lawyer to make sure that their side of the transaction is done properly.
An advisor charges an hourly fee that is comparable, or often higher, than a standard business lawyer’s legal fee. If you already have a lawyer looking after your interests, then you do not need to pay extra for an advisor as well. Drop the advisor and put those thousands of dollars back in your pocket.
Consider selling as-is
Many business owners invest thousands in fixing up their businesses and even adding more staff to attract buyers and raise the selling price. But if you spend $50,000 on improving your business and the improvements only bring you an extra $30,000 or $40,000 at closing, then you are actually losing money.
Instead of investing time and money into turning your business into something it is not, you should consider selling as-is. You can put up a new coat of paint in the retail sales area and maybe add some stocking shelves to the warehouse, but investing a lot of money to make your business look better to potential buyers is a waste of resources.
You also need to consider the fact that your buyer may have dramatic changes in mind for the business after they take control that could mean removing all of the upgrades you added. It is difficult to tell what a buyer wants or does not want when it comes to your business, which means you are better off just selling your business as-is and saving your money.
When the time comes to sell your business, you will have a checklist of responsibilities to worry about before the sale closes. In order to maximize the financial reward you get from selling the business you have spent years building, you need to understand how you can save thousands of dollars on the selling process and put more profit in your pocket.
Peter Watson is the CEO and founder of www.bizlistings.com.au – A buying and selling business for sale website.