It’s not uncommon for a business owner who is considering selling his business, to ask me what percent of businesses we sell. The business owner looks at this figure like a batting average – a measure of how good we are and what the chances are that her business will sell if she lists it with us. Unfortunately, this percentage doesn’t really give that information. The biggest factor that affects this percentage is how selective a business broker is in choosing what businesses to sell, similar to how a baseball player’s batting average goes down the more bad pitches they swing at.
So, why don’t businesses sell? Here are some of the main reasons:
- They don’t generate enough income. A business needs to generate at least $100,000 in owner income to be of interest to most buyers.
- They are over-priced. A business broker can provide a valuation, but the market tells us what the business will sell for.
- They don’t have good financial records and, as a result, they don’t pass due diligence.
- They can’t get financed. Most buyers borrow most of the purchase price.
- They are too specialized and require skills that few buyers have.
Business brokers are not all the same and there are things a business broker can do to increase the percentage of businesses they sell. The best thing they can do is get more buyers to look at the businesses they have available to sell. Here are the many ways that we increase the number of buyers who look at the businesses we sell: First, we do what we can to increase the number of buyers that visit our website. We use search engine optimization to be listed high in search terms that buyers use to search for a business to buy. We also use paid Google Adwords to advertize our businesses for sale. We advertize our businesses for sale on the leading Internet business for sale websites. We market the business to our buyer database of business buyers looking for a business to buy. We market the business through BBANE, a group of New England business brokers who co-broke their businesses for sale. Finally, we use direct marketing to reach businesses that may be potential buyers for the business. By using all of these methods, we generate more buyers who look at the businesses we have available for sale. By doing so, the businesses we market tend to sell faster for more money.
The above list can go on, but these are some of the primary reasons a business doesn’t sell that are outside the control of the business broker. When evaluating business brokers, look at what they are doing to generate buyers if you want to get a better idea of how good they are and whether your business will sell.