How can I sell my business?
An owner is ready to retire, but wonders if going through a business broker would mean getting a better price. Plus: good books for entrepreneurs.
(FSB Magazine) -- Dear FSB: I've been in the hospitality trade (two inns, one restaurant) for 38 years, and I think I'm ready to sell my company and retire. I've had a couple of nibbles, but the offers seem low. Could I get a better price by going through a business broker? - Name withheld by request, Pleasanton, Calif.
Dear Pleasanton: Business brokers, who aren't exactly unbiased, will tell you that the average price on a brokered deal is 20% higher than your company would fetch if you sold it yourself. Even if that figure is a bit puffy, brokers' fees average 10% to 15% of the sale price, so using a middleman may well pay for itself. To find a broker near you, go to ibba.org, the International Business Brokers Association site.
Many of the biggest brokers, such as Sunbelt Business Advisors in Charleston, S.C., charge nothing until your business sells. As for whether the prices you've been offered are on the low side, Sunbelt CEO Ed Pendarvis (sunbeltnetwork.com) says that - depending on cash flow, location, and industry strength, among other factors - most small businesses are now selling for two to four times annual earnings.
Dear FSB: Are there any good books that someone considering entrepreneurship should read? - Wayne Kaminski, Lebanon, N.J., Windsurf61@yahoo.com
Dear Wayne: Hoo boy. Amazon lists 76,041 books under the heading "small business" and 87,493 with the word "entrepreneur" in the title.
But one place to start is with Beating the Odds in Small Business by Tom Culley (Fireside, $24.95). Culley is a former McKinsey consultant who has been involved in dozens of startups, and his book is wonderfully clear-eyed, realistic, and smart.
Readers, what say you? Write and tell us - and Wayne - about your favorite book on starting up.click here.