Viewing by month: September 2011
Advantages of Using a Broker to Sell Your Small Business
Although selling a business on your own (FSBO) may be an enticing idea, there are several reasons why it is advisable to enlist the help of a broker to sell you small business. Despite the temptation to save on commissions and fees, ultimately a business broker can significantly accelerate and remove hassle from the selling process.
By paying a broker commission, you are essentially providing incentive for the broker to get the best possible price for the sale of your small business. If you were to choose to do a FSBO, the sale price will often be lower than what a broker could have negotiated, therefore offsetting some of the commission cost. A broker will also have a clear understanding of the market and the value of your business, which again will help you to achieve a better sale price.
Business brokers are skilled at showcasing your business and highlighting its best attributes, therefore attracting buyers. Brokers also maintain an extensive database of buyers and contacts, which greatly aids the search for the right buyer. A good broker will also screen potential buyers in order to ascertain whether they are genuinely interested and qualified or simply wasting your time. Once buyers are interested, a broker will often generate competition between the buyers in order to accelerate the sale and attain a better price. All of these services speed up the selling process considerably, and eliminate many headaches that you could otherwise be burdened with.
It is extremely important that your employees, competitors and vendors are unaware of the impending sale, although this can be difficult to conceal if you do a FSBO. However, a broker acts as the intermediary in such situations, and therefore enables you to keep the sale confidential. This mediator role also comes into play with regard to buyer/seller relations, as all negotiations pass through and are interpreted by the broker.
Lastly, a broker is highly valuable when it comes to finalizing the sale, as they understand all the nuances and legal requirements that the average seller may not be aware of. A good broker plays a key role in the entire buy/sell process, and is well worth the price.
Advantages of Buying a Franchise
With all the uncertainty in the current market, it can be a daunting task to start a small business. Starting your own small business from scratch carries many risks, and may not be feasible for the majority of first time entrepreneurs. Buying a franchise can eliminate numerous risks, reduce start up and ongoing costs, and still prove to be a great business opportunity.
Franchises have a proven record of success, and have created effective business models that can be easily applied by numerous people in a variety of locations. You are able to view the past success of the franchise company, and also contact current franchisees in order to make an informed decision regarding the purchase of a franchise. A franchise should already have strong brand recognition, which is particularly valuable when attracting customers.
Once you purchase a franchise, extensive training programs and ongoing support are almost always offered. Franchise company staff can help you deal with issues that occur while running the business, meaning that you are never alone. This is a huge bonus for those that are new to owning a small business, and can avoid stressful situations and costly mistakes. You should also be provided with marketing assistance, from budgeting to customer retention. Remember, the franchisor wants you to succeed and therefore will aid you as much as possible, as a poor result would reflect badly on the company as whole and potentially jeopardize their other franchises.
The franchise company will also often provide assistance when it comes to buying land for the new franchise, and during the construction process. They can regularly help negotiate superior deals on the sale of land, the selection of contractors and the obtainment of necessary equipment and supplies. The purchasing power of the franchise company as a whole can be extremely beneficial for you as an individual, and can also enable you to secure good deals for ongoing purchases.
A huge advantage of buying a franchise is the minimization of risk. A good franchise has a proven track record, provides ongoing assistance and allows you to compose more certain future projections for the business. Of course, you must still research and clearly assess the risks and rewards of buying a franchise, but for many it is a viable and practical option. It can also provide an ideal stepping stone to starting your own independent small business.