Business for Sale by Owner: Tips and Traps

When a business is put up for sale by its owner, he or she may have their reasons for relinquishing the business. It could be the result of a crushing financial condition or it could be something as mundane as the need for a change of pace. Whatever their reasons, it is you, the buyer, who has to decide whether the business put up for sale by the owner is worth your while.

A business is worth buying only if it is congruent with your existing skill set and if it gels well with your personal interests, expertise and experience. For example, you may be a foodie who knows the name of every kind of exotic food, but that does not mean that you will make an excellent hotelier or restaurant owner. So, your first concern is to spot a business for sale that suits you the most. That way, the risk and potential of failure is greatly reduced.

When you have decided to buy a particular business that has been put up for sale by its owner, it is essential that you dig a little into their reasons for selling, even though the digging does not sit well with you. Understand this, businesses are put up for sale by their owners because the owners want out. The reasons could be many:

Ø Health problems

Ø Personal problems

Ø Emotional crises (like a divorce or death of a partner)

Ø Financial crises

Ø Personal financial troubles

Ø Climbing costs

Ø Obsolete product or technology

Ø Lack of experienced staff

Ø Desire for quick profits

The best way to find out the exact reasons for selling is straight from the horse’s mouth: ask the owner. For this, you will have to take the time to build a relationship with the owner, either through direct contact or through emails. At times, you may also have to depend on other sources for information. Make sure that there are no ugly surprises waiting for you after you take over the business.

When a business is put up for sale, it is only natural for the owner to expect a quick settlement. But, there is no need to hurry up. Take your time with the paper work. Expect to spend at least 30-60 days to study the current business position, to draw up a cogent agreement and to get things moving in the right direction. Make use of the services of a qualified accountant and solicitor. Do not skimp on these expenses as the future of the business may depend on something they unearth.

Before you sign on the doted line, make sure that you have considered all aspects of the new business. Look into the competitive factors involved like the price, delivery, change etc. Find out if you will be doing business in a mature industry or an emerging one. Both have their own advantages and risks. Have some clear ideas about your operational costs, advertising charges, monthly running costs etc. Find out whether you will be inheriting the staff along with the business, and if so, whether they are competent enough to handle their jobs.

Ultimately, buying a business put up for sale by the owner could be remarkably profitable. There are people who specialize in the selling and buying of businesses, and they make a killing doing it. It all depends on the amount of effort and discretion you put into the process.

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Business for Sale by Owner

Is it really a good idea?

There are a small group of business owners that have the desire to try and sell a business themselves without using the services of a business intermediary (without a “business broker”).  Sometimes this may make sense, depending on the business, but often this strategy does not lead to a successful business sale – or one where the price is much lower than could have been achieved by using the services of a business brokerage.

This article is a brief exploration of some reasons to consider selling a business privately and also some reasons why it is better to use a business brokerage firm.

Reasons to list a business for sale by owner

In a situation where the business is very small (valued less than ,000 or 0,000) then it might be wise to consider listing the business for sale by owner.  The key is to determine for yourself if the commission that a business broker is enough to use his or her services.  Although a business broker may work on a success-based commission, if the overall business value is too small then it may not even make sense for a professional to take on the listing.

Another reason to consider listing a business for sale by owner is if the company is not doing well financially.  Perhaps it is not profitable and profitability is not expected to be reached in the short or medium-term, then this may be a case where it might make sense to sell the company privately.  These types of businesses are difficult to sell from the business broker’s perspective and you may have concluded that the business value is near the market value of its assets.  In this scenario, using a business broker to sell the venture as a going concern would be challenging.

Some reasons not to list a business for sale by owner

Although there are many reasons to use the professional services of a business broker (or “sales representative”), here are 3 reasons to consider why it is not advisable to try to sell your company privately:

Exposure to many buyers

If you wish to sell a business you will need exposure to a large pool of buyers.  This is important for a number of reasons but the most important one is that most business “buyers” never end up purchasing a business at all.  There are many, many more ‘tire kickers’ in the market than there are legitimate buyers so it is important to get as much exposure for your business for sale as is possible.  This is needed in order to land of a few serious buyers that might be interested in making an offer for your company.  A business broker will have access to a larger pool of buyers and will know how to attract interested parties to view your business.

Communication

Many business buyers prefer to channel their thoughts and feedback to a business broker instead of directly to the business owner.  Often, the business broker is used as a sounding board or just an unbiased ear to listen.  The business intermediary will also maintain the honest flow of communication that is so critical when trying to sell a company.

Guidance through the process

business buyers and sellers are usually new to the process and are usually more than happy to rely on a business brokerage professional to manage the process.  Most people are surprised to learn how complicated a business sale can get and get significant value from the guidance that a professional can provide.

Listing a business for sale by owner is certainly an option for all business owners to consider.  Please weigh all of your options carefully before you decide which is the best decision for you.  Talk to a business broker to learn more about the business sale transaction.

In the current local economy, this food business is growing. Its products are grown on Kauai and purchased by the local community for the past 17 years. Turn key operation. Established customer base, brand loyalty, trained & experienced part-time employees, all equipment needed to continue current business & excess capacity for growth. Excellent growth potential , both wholesale & retail, for ambitious new owner. Details to qualified buyer with signed confidentiality agreement. Current owners have family medical emergency on mainland and need to move in near future. Private: Gross annual revenues:5K, expenses including leasehold: approx K. Includes K in equipment & inventory. Nothing else like it on Kauai. Expensive to permit, build, equip & establish. With growing equipment, licensed commercial kitchen (harvesting & refrigeration), truly a turn-key operation. SBA financing w/attractive rates if good credit & small capital. Some owner financing with right terms. All offers considered. Sellers motivated by declining health of close family member (mainland).

Established business with steady stream of clientele. Business can be moved or landlord will sign new lease with acceptable renewal options. Expenses are low & the profit is BIG. There are 2 to 3 groomers that are on a 50/50 commission split & there is no other employee or payroll expenses. The location is prime, close to I-75 & SR54/SR56 intersection. This is a great opportunity for a turnkey operation & for an owner operator to double their gross net sales. Don’t miss this chance to make back your initial investment in as little as one year. The current owner is a business man, not a groomer. This is a business that anyone can run for little work, little stress, little liability & large cash profits. Seller will transfer all equipment, offer training & will consider financing options for the right buyer.
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Business For Sale By Owner on eBay:

US $15,000.00 End Date: Wednesday Sep-29-2010 15:38:28 PDT Buy It Now for only: US $15,000.00 Buy it now | Add to watch list

Please call 310-593-3111 or email VRRickCarlson@gmail.com for more details. Seller Purchased 9 Months Ago For Similar Total, And Just Wants Investment+Leasehold Improvements To Recoup His Costs. Includes 94 State Of The Art Pos Card-Operated And Trackable Speedqueen Brand Washer And Dryers. Here’s The Breakdown For Washers: 18 30lb-Ers Charged 3 Per Load. 2 80lb-Ers Charged 7.50 Per Load. 10 60lb-Ers Charged 5.60 Per Load. 20 Toploaders, Charged 1.50 Per Load. Here’s The Breakdown For Dryers: 4 50lb-Ers Charged 0.50 Per 12 Minutes. 40 Standard Dryers Charged 0.25 Per 12 Minutes. 94 Total Pieces Of Equipment Included In The Sale Of The Business. Selective Advantages Of This Laundromat Are Numerous And Include This Completely Customizable Point Of Sale Card Reading Solution That Enables The Owner/Operator To Dictate Exact Costs Of Each Transaction. Add Or Subtract According To Pricing Parameters That Fit Your Budget, The Cards Are Very Easy To Manipulate And Keep Track Of. Clients Visit This Particular Location And Drive From 20+ Miles Away Because Of It’s Cleanliness And Bright And Airy Layout. This Isn’t A Dingy Laundromat, And Is Priced Similar To Those That Are Newly Built. Laundromats Of Comparable Layouts, Cleanliness, Size (3666 Square Feet) Cost Well Over 1 Million To Buildout New. Here You Get A New Laundromat Feel With The Established Presence And Brand Development That Has Taken 4 Years To Create. Employees Are Exceedingly Loyal, And Wish To Stay With New Owner …
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