Mistakes to avoid in selling your business
Approaching competitors is one way to find buyers for your business, according to Ask FSB's experts.
(FORTUNE Small Business) -- Dear FSB: We own a gasoline/convenience store and would like to retire. I am 66 and my husband is 70. We have listed with a local realtor and are now listed with Sunbelt (a network of business brokerage franchises), but have still seen no activity. Any suggestions on getting this to move? We've been here 41 years, so we're not new kids on the block.
- Janice Wilshusen, Fremont, Neb.
Dear Janice: A gallon of gas cost 33 cents back when you bought your business. The value of your company might not have increased as dramatically as the price of gas, but professional business intermediaries should be able to help you sell it and drive off into retirement.
You've already resolved one mistake, according to Scott Bushkie, president of Cornerstone Business Services in Green Bay, Wisc., a brokerage that specializes in selling gas station/convenience stores.
"One of the most common mistakes we see is business owners going to their local real estate agent to list their business," he says. Selling a business and selling a home are two very different processes.
"They could be the best real estate agent in the world, but if they don't understand business - cash flows, balance sheets, how values are derived - there's little chance of selling," Bushkie advises.
Going to Sunbelt was a step in the right direction. Sunbelt's a franchise, and each is different. Buschkie suggests asking a few questions to make sure they are the best intermediaries for your business: What do they specialize in selling? How many of those types of businesses have they sold? How many in the last year? How many of them are they trying to sell at once?
"Sometimes if a person has too many businesses for sale at once, yours might not be getting as much attention as you hope," he says. If you want to find a different brokerage, one that might specialize in gas stations in your region, start at the International Business Brokers Association website.
At the end of the day, it comes down to exposure, Bushkie says.
"Make sure Sunbelt has listed it on websites like www.bizbuysell.com, www.bizquest.com and www.businessesforsale.com ," says Andy Cagnetta, CEO of Transworld Business Brokers Inc. of Ft. Lauderdale, Fla.
Sunbelt has a large internet presence, but that's not always the best way to find buyers for this type of business, according to Bushkie.
"We've found that in small, rural markets, listing in newspapers is not a bad way to go," he says.
Be proactive. "Instead of waiting for buyers to come to you, the broker should think strategically about who might logically want to own your business and approach them in a confident way to see if there's interest," says Bushkie.
For example, in one transaction he's currently working on, the gas station for sale is located on one side of a busy highway next to other gas stations. Two more gas stations sit on the other side of the interchange. Bushkie approached the owner of two of the competing businesses.
"It just made strategic sense for the other owner to want to own several business in that immediate area. They can manage multiple stores in the same location very easily, even sharing employees. They can control pricing, that kind of thing," says Bushkie.
Make sure your business is valued correctly, says Chris Diglio, chairman of the IBBA and president of Orlando-based Corporate Investments International.
"Did you tell the broker how much you wanted for it? Or did he do a formal valuation? It could be that 80 percent of the problem is that it's overpriced," says Diglio. Your broker should do the valuation, not you.